All in the Ricchetti Family

One former lobbyist works in the White House; the other runs the family business representing companies that received bailout dollars

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March 16, 2012

He has represented a drug company that pressured doctors to prescribe seniors an ineffective and expensive drug; a chemical company that contaminated a major water source; and a tech company convicted of bribery. He has represented companies guilty of nearly all the corporate sins that the Obama Administration has condemned in speeches and campaign stops.

He also has a brother in the White House.

His name is Jeff Ricchetti and, together with his brother Steve, he has raked in millions as one of the top lobbyists in Washington. The pair has earned admiration and respect from K Street and beyond. So much so that Vice President Joe Biden hired Steve as a new top aide—a move that seems at odds with President Barack Obama’s pledge to keep K Street out of the White House.

Steve deregistered as a lobbyist after Obama’s election in order to avoid the two-year barrier between lobbying and public service. But that does not mean he left the world of influence.

Steve continued to serve as an executive at the firm helping to direct strategy even as it lobbied Congress and the administration on behalf of clients including bailout recipients such as General Motors and Fannie Mae. The Ricchettis have visited the White House 11 times since September 2009, meeting with administration officials such as Pete Rouse, David Axelrod, Bill Daley, and John Kraemer of the Office of Information and Regulatory Affairs, according to administration records.

General Motors has paid the firm $1.84 million to lobby since 2001, while Fannie Mae paid $620,000 between 2001 and 2005—a period in which Congress flirted with bringing stricter oversight to the housing lender that has cost the taxpayers $141 billion and helped bring down the housing market.

American University professor James Thurber, who has advised the American Bar Association and Congress on ethics reform, said such behavior is common with the reforms set forth by the Bush and Obama administrations.

"You can have 12 lobbyists working for you, direct them, give strategic advice on how to lobby and still not have to register," Thurber said. "It’s a huge loophole."

Others in the industry confirmed that this is common practice.

"You’re a puppeteer in the lobbying firms," said a veteran GOP lobbyist. "You’re not lobbying, but you’re pulling all the strings."

About 2,200 lobbyists have deregistered since 2008, according to Thurber, when Obama assured voters that lobbyists "will not run my White House."

The pledge earned the president praise on the campaign trail, but Obama has found it hard to distance himself from the industry.

In February, the Free Beacon reported that former Rep. Ron Klein (D., Fla.) was a registered lobbyist, as well as an Obama campaign moneyman. The campaign claimed to sever ties with Klein, while the former Spirit Airlines lobbyist pledged to deregister.

Lobbyists who have worked alongside and even in opposition to Ricchetti do not question his ability to be an effective leader in the White House.

"Steve’s honest and cares about the public interest," said a veteran lobbyist who has worked with Ricchetti in the past. "The problem is not with the Ricchettis; the problem is with the short-sighted White House approach to the whole thing."

Where to draw the line regarding family members who lobby is another question. The Honest Leadership and Open Government Act of 2007 prohibits immediate relatives from lobbying members of Congress. And federal law prevents members of the executive branch from participating in "a particular Government matter that will affect" the financial interests of their families.

Thurber said the congressional rules are clear and the federal statute can be seen as even more strict, but "there’s nothing there to prevent someone from going to the White House and giving advice."

Many White House players have prominent family members in the lobbying industry. Obama energy czar Carol Browner's husband, former Rep. Tom Downey, and his lobbying firm, Downey McGrath Group, has taken in $8.7 million since Obama took office.

Obama's transition team director John Podesta's brother Tony is a legend in the industry. Tony laid the roots for the rise of Ricchetti Inc.

Jeff Ricchetti cut his teeth lobbying for Podesta, bringing in top name clients, some of which would not jibe well with the president’s campaign rhetoric:

  • Health insurer Blue Cross and Blue Shield, which paid him $260,000 in 1999 and 2000.
  • Eli Lilly ($865,000 since 2000), the drug company that pushed doctors to prescribe an ineffective antipsychotic drug called Zyprexa onto elderly patients.
  • Dow Chemical ($280,000 between 1999 and 2000), which would later contaminate Saginaw Bay in Michigan, leading to the resignation of an EPA official.
  • Siemens ($1.325 million since 2001), which pled guilty to bribery charges in 2008.

After Steve Ricchetti left his post as deputy chief of staff for the Clinton administration, the brothers formed Ricchetti, Inc. in 2001 and soon acquired an A-list clientele.

Steve also has had his hand in a number of big business campaigns. The American Association Of Life Insurers has paid the firm at least $865,000 since 2000; other clients include the American Council of Life Insurers and the Association for Advanced Life Underwriting.

Neither the life insurance associations nor Ricchetti Inc. returned calls for comment.

There were 12,000 registered federal lobbyists in 2011, according to Thurber, down from nearly 14,800 in 2007.

Thurber said Washington would have closer to 100,000 advocates if such figures included associations, think tanks, and other high powered political jobs in policy, communications, and interest groups.

D.C. insiders and policy experts insist no administration could function without drawing from this expanded pool of interests and players. They suggest Obama would be better off vetting qualified candidates rather than splitting hairs over a pledge he has already broken.

"The last thing you want to do is keep knowledge out of government and that’s what these revolving door rules do," Thurber said. "Disclosure and transparency are what you need."