"A Calamitous Collapse": Former Podesta Group Employees Reveal Truth Behind Firm's Downfall

Former Podesta Group employees have spilled the beans about their former boss, Tony Podesta - in a scathing Wall Street Journal article which details the firm's collapse. As part of the report, The Journal got its hands on "internal Podesta Group accounting," as well as "financial documents, calendars and communications."

The D.C. lobbying firm founded in 1993 by John and Tony Podesta folded shop following Hillary Clinton's monumental loss in the 2016 US election, when a flood of clients ran for the door virtually overnight, realizing the Podesta Group's influence ended with the Clinton campaign. 

The Journal describes Tony Podesta's fall as a "calamitous collapse" following the 2016 US election:

Then he fell, a calamitous collapse propelled by unexpected blows, delivered by fate and made worse by hubris. Financial problems, legal threats and the election of President Donald Trump took it all away—the clients, the firm and, finally, Mr. Podesta’s position as one of Washington’s most influential players.

Here are some cliff notes from the report:

  • The Podesta Group ended 2015 as Washington D.C.'s third largest Lobbying firm, with nearly $30 million in revenue from over 100 clients - who promptly bailed after Hillary Clinton lost the 2016 election. That didn't seem to bother Tony.  

The string of embarrassing news accounts disturbed many of the Podesta Group’s corporate clients, companies that preferred to stay clear of such publicity. Mr. Podesta operated as if the whole mess would soon blow over. -WSJ

  • The Podesta Group got in trouble for the IRS for improperly reporting a $300,000 shipping expense for Tony Podesta's art, after which he began billing his firm $360,000 a year to rent pieces displayed at the office. 

Employees of the Podesta Group set up a system to prevent Mr. Podesta from being reimbursed by the company for personal expenditures. A 36-page instruction manual for Mr. Podesta’s executive assistants included this directive: “It is up to you and your best judgment as to what gets reimbursed.”

  • Podesta told his employees that he would entertain letting them buy equity in the firm - then worth an estimated $50 million, then stiffed them when they showed up to discuss. 

Firm employees approached Mr. Podesta in early 2014 about selling them a share of the business. The Podesta Group was worth at least $50 million at the time, former employees estimated. Over dinner, Mr. Podesta told them he was open to the idea and suggested they meet with lawyers.

On the day of the meeting, employees gathered in the firm’s conference room. Mr. Podesta didn’t show.

  • Tony Podesta worked for clients without his firm's knowledge - such as Italian tire maker Pirelli, which paid $113,500 a year to Podesta while the Podesta Group was concurrently representing French tire manufacturer Michelin.  

Neither Michelin nor its Podesta Group lobbyists knew about Mr. Podesta’s side deal, according to the people involved.

  • SunTrust bank severed ties with the Podesta Group when they discovered that they were doing work for a U.S. subsidiary of a sanctioned Russian bank - presumably Russia’s Kremlin-owned Sberbank, which paid the Podesta group $170,000 over a 6 month period through September 2016 to lobby against 2014 economic sanctions by the Obama administration.

SunTrust Banks Inc. sought to sever ties with the firm over the sanctioned Russian bank. The Podesta Group’s chief executive sent an exasperated email to a colleague. “Tony thinks these types of clients have no repercussions on the firm,” she said, but “this should really provide evidence that we have to take the clients we bring on seriously.”

Following Mrs. Clinton’s defeat that November, the Podesta Group cut bonuses and commissions.

  • One day after US prosecutors announced the indictments of Manafort and Gates, "an official with the firm's new bank, Chain Bridge Bank, demanded $655,000 in cash or collateral within 24 hours - or it would cut the firm's credit line."

Mr. Trump, who occasionally pointed an unwelcome spotlight on the firm, tweeted that day: “The biggest story yesterday, the one that has the Dems in a dither, is Podesta running from his firm.” -WSJ

  • Podesta's purchases of artwork behind his wife's back reportedly caused Heather Podesta to file for divorce. Tony kept most of his art collection, while Heather received nearly $5 million in retirement savings, homes in Washington and Manhattan, and $4 million paid quarterly over five years. 

  • The day after Tony's Podesta's expensive divorce was finalized, he told employees the firm could make more money by abandoning their liberal ethos and representing big tobacco and the NRA - leading to one lobbyist quitting, costing the firm over $2 million in annual revenue. 
  • Clients were spooked as Special Counsel Robert Mueller began closing in on associate Paul Manafort. Recall the Podesta Group decided (coincidentally) to retroactively file as a foreign agent for their work with the Manafort's Pro-Russia Centre for a Modern Ukraine campaign – tied to former Ukrainian president Viktor Yanukovych, shortly before Manafort's indictment. The Podesta Group made $1.2 million as part of that effort

Before dawn on Monday Oct. 23, 2017, NBC News reported that Mr. Mueller was preparing to indict Mr. Manafort and implicate Mr. Podesta regarding the Ukraine work. The phones started ringing: Clients wanted to know what was going on. The firm’s bank wanted to discuss its account.

The following night, Mr. Podesta threw himself a birthday party, serving hundreds of guests pizza from a brick-oven stove in his backyard in Kalorama. -WSJ

  • The unraveling was swift. As clients such as Wells Fargo, Wal Mart and Oracle Corp. bailed on the Podesta Group, they death-spiraled into default - as Tony refused to pledge his giant art collection against firm obligations. 

With clients leaving, the Podesta Group had no money. Rent was due the next day. One idea was to use Mr. Podesta’s art collection as collateral for a loan, but he refused.

“At that time, it was inadvisable to provide additional guarantees as an individual for the obligations of the corporation,” the Podesta Group’s spokeswoman said.

...

The Podesta Group’s chief financial officer sent Mr. Podesta a 7:23 p.m. email: “If we don’t have collateral pledged prior to 5pm tomorrow, we will be in default.” If the firm went into default, the CFO wrote, “we will not be able to meet our rent, your art payments, ad campaigns, and most importantly payroll.

Mr. Podesta responded: “need list of next 5 layoffs,” among other questions. The next day, he left for an art show in Turin, Italy. The bank’s deadline passed.

...

On Friday, the firm’s CFO quit. That night, a senior manager sent an email to Mr. Podesta, still in Italy, saying the bank had frozen the firm’s funds.

“This means that we have no way to pay employees,” the email said. “If we do not alert employees immediately that we have no way to pay them for their work, the firm is committing fraud.” -WSJ

Meanwhile, in October 2017 a "long time" former Podesta Group executive with "direct personal knowledge" detailed several other aspects of life inside Tony Podesta's lobbying machine to Tucker Carlson. Some bombshell claims and quotes from the former employee:

  • In 2013, John Podesta allegedly recommended that Tony hire David Adams, Hillary Clinton’s chief adviser at the State Department, giving them a “direct liaison” between the group’s Russian clients and Hillary Clinton’s State Department
  • In late 2013 or early 2014, Tony Podesta and a representative for the Clinton Foundation reportedly met to discuss how to help Uranium One – the Russian owned company that controls 20 percent of American Uranium Production – and whose board members gave over $100 million to the Clinton Foundation.
  • “Tony Podesta was basically part of the Clinton Foundation.”
  • Believing she would win the 2016 election, Russia considered the Podesta Group’s connection to Hillary highly valuable.

Separately, White House visitor logs revealed that Tony Podesta visited the White House at least 114 times during the Obama administration, and was said to have had "special access" to the administration through his brother, John Podesta, while lobbying for various pro-Kremlin interests.

  • Podesta Group was a nebulous organization with no board oversight and all financial decisions made by Tony Podesta. Carlson’s source said payments and kickbacks could be hard for investigators to trace, describing it as a “highly secret treasure trove.” One employee’s only official job was to manage Tony Podesta’s art collection, which could be used to conceal financial transactions.

The Podesta group also earned $180,000 lobbying for Russian-owned mining company Uranium One during the same period that the Clinton Foundation was receiving millions from individuals connected to the U1 transaction.

The WSJ must have inadvertently left out another factor which may have contributed to Podesta Group clients heading for the hills; a spotlight on Tony Podesta's strange artwork which began swirling around the internet during the emergence of the discredited "pizzagate" theory.

Internet sleuths pointed to a June, 2015 issue of "Washington Life" magazine featuring some of Tony Podesta's artwork, along with a 2004 Washington Post article entitled Married, With Art - describing how shocked Podesta guests stumbled across pictures of naked teenagers during a house tour. 

At political events, there’s an inevitable awkwardness,” former Clinton administration official Sally Katzen

Folks attending a house tour in the Lake Barcroft neighborhood in Falls Church earlier this year got an eyeful when they walked into a bedroom at the Podesta residence hung with multiple color pictures by Katy Grannan, a photographer known for documentary-style pictures of naked teenagers in their parents’ suburban homes. “They were horrified,” Heather recalls, a grin spreading across her face. -WaPo

One piece of art which sparked curiosity is an illustration of a girl against a green background:

Photo: Joseph Allen, Washington Life Magazine

As well as more pictures of children laying around:

...from an artist who creates pictures of children in grotesque circumstances:

Then there's artist Louise Bourgeois' "Arch of Hysteria" in Podesta's Falls Church home - a headless body contorted into a "tetanus arch" - which also happens to be a pose Jeffrey Dahmer posed at least one victim. Comet Ping Pong pizza shop owner James Alefantis - another figure in the unproven "pizzagate" controversy, thought it was pretty cool while he was hanging out at Podesta's place.

Here's one of Podesta's many other staircases in 2014:

Tony also loaned out a wax statue entitled "Dismembered" to the DC College of Arts and Sciences in 2011, which appears to depict a vivisected child:

At the end of the day, disturbing art or not - Hillary Clinton's loss meant that Tony Podesta's ability to provide clients access to the White House had disappeared for at least four more years. Indeed, the Podesta Group lost its most valuable commodity on the night of November 8, 2016 - and the rest is history.