This story was updated at 7:50 p.m. on Friday, Oct. 22, 2021.
In the days leading up to a planned layoff of 1,400 steelworkers in Butler last year, U.S. Congressman Mike Kelly and his staff scrambled to secure the Trump administration’s help in protecting the plant’s Cleveland-based owners from cheaper, foreign imports.
As plans were moving forward to shut down AK Steel Butler Works, federal officials quietly contacted the company on April 28, 2020 to say they would look into helping to protect the facility: the last remaining U.S. producer of special steel for the nation’s electrical grid.
It was welcome news to the Pennsylvania lawmaker’s staff who were apprised of the decision — and the canceling of the plant’s imminent closure.
The next day, the Republican lawmaker’s wife, Victoria Kelly, bought thousands of stock shares in Cleveland-Cliffs, the parent company.
The purchase, first revealed by the Pittsburgh Post-Gazette last year, is detailed in a scathing report by an independent panel of congressional investigators, which found “substantial reason” to believe that the congressman’s wife made the transaction based on confidential information picked up by her husband while carrying out his official duties as a member of Congress.
The recommendations by the Office of Congressional Ethics were unveiled on Thursday with interviews, texts and emails that attempt to show Mr. Kelly’s knowledge of the Trump administration’s actions, as well as “anomalies” in his wife Victoria’s stock purchase before news of the company’s victory was made public.
The report calls on the U.S. House Committee on Ethics to issue subpoenas for both Mr. Kelly, of Butler, and his wife, as well as former U.S. Commerce Secretary Wilbur Ross and Mr. Kelly’s former chief of staff — all of whom did not cooperate in the probe.
In less than a year, her investment would reap anywhere from $42,800 to $142,000, according to a Post-Gazette analysis.
Thomas W. King III, an attorney for Mr. Kelly, called the report “fatally flawed” and “noticeably devoid of any evidence of misconduct.”
Dylan Hedtler-Gaudette, government affairs manager for Project On Government Oversight, a nonpartisan watchdog group, said the findings and recommendations were an “extraordinary situation.”
“They wouldn’t be going through all this stuff unless they had a strong inclination of having a case here,” he said.
A timeline provided by investigators shows that Ms. Kelly’s stock purchase came five days before U.S. Commerce officials announced the investigation into foreign steel dumping in a May 4, 2020 press release — the same day the company announced it would not shutter its Butler plant.
Ms. Kelly bought between $15,001 and $50,000 in Cleveland-Cliffs shares, a “sharp departure from her investment behavior, leading to the inference that this investment was due to some special event or consideration,” an expert consultant concluded in the report.
Before her investment in Cleveland-Cliffs, the transaction was Ms. Kelly’s first individual stock purchase in nearly a year. In fact, she had liquidated all of her individual stock holdings the previous summer, and converted the profits into bonds and mutual funds, the report stated.
But the following spring, Ms. Kelly bought into the steel maker for $4.70 per share, the report said.
Within five months of her purchase, Cleveland-Cliffs stock had risen 48%, the Post-Gazette reported in September 2020.
By then, experts began to call into question whether the transaction could have violated the U.S. House ethics rules that bans members from “improperly using their official positions for personal gain.”
At the time, a spokesman for Rep. Kelly told the Post-Gazette that “Representative Kelly’s wife made a small investment to show her support for the workers and management of this 100-year old bedrock of their hometown.”
Ms. Kelly held onto her Cleveland-Cliffs stock shares until this past January when she sold them for just over $18 each, according to the findings.
Congressional ethics investigators began a preliminary review of the transaction in March, notifying both the Congressman and his wife of the inquiry.
The couple refused to cooperate, as did Mr. Kelly’s former chief of staff Matt Stroia and Mr. Ross.
In his response on behalf of the lawmaker, Mr. King wrote: “We respectfully disagree with many of the assertions and characterizations in the report, and we look forward to working with the staff to resolve the matter quickly.”
Whether the subpoenas are issued will be up to the 10-member House Committee on Ethics, which has taken over the probe.
If the committee finds a violation, it could issue a committee sanction, or escalate to the full House a recommendation for a reprimand, fine or censure. But such cases are rare.
The panel does not comment on current investigations, according to Tom Rust, staff director and chief counsel for the committee.
In addition to the ethics probe, Mr. Kelly faces separate scrutiny from campaign finance watchdogs who have alerted ethics officials to the representative’s stays at luxury resorts on the dime of his political action committee.
The nonprofit Campaign Legal Center filed a complaint two weeks ago with the Office of Congressional Ethics, saying that Mr. Kelly’s airfare spending and stays at five-star hotels — tens of thousands of dollars — were potentially of personal use that violate house ethics rules.
Mr. Hedtler-Gaudette noted that Congressional ethics investigations often lack serious penalties, though insider trading issues can lead to civil and criminal investigations.
“There’s no teeth behind any of this stuff really,” said Mr. Hedtler-Gaudette, “All these instances cry out for Congress to clean house and do something about this.”
Ashley Murray: amurray@post-gazette.com; Joel Jacobs: jjacobs@post-gazette.com
First Published: October 22, 2021, 9:42 p.m.
Updated: October 22, 2021, 11:56 p.m.
