Nathan Deal’s campaign for governor has paid a company in which the Republican nominee is a part owner more than $135,000 to lease aircraft — many times more than any other candidate for governor in this campaign cycle.
Since its launch in May 2009, Deal’s campaign has paid $6,000 a month for access to an airplane and a helicopter, as well as additional thousands of dollars a month in actual flight costs.
Deal’s Democratic opponent, Roy Barnes, has paid about $16,000 for aviation services since July 1, 2009. Deal’s former rival for the GOP nomination, Karen Handel, paid $6,325.40 in airfare in 2010.
State ethics laws bar candidates from using campaign money for personal benefit. It is unclear whether Deal personally benefited from the money paid to his company.
Chris Riley, Deal’s campaign manager and pilot, said neither Deal, his campaign nor his private company are making money from the arrangement.
The campaign, Riley said, sought an attorney’s opinion “to be sure we are appropriately and correctly abiding by the state ethical guidelines. However, we are more than willing to submit and ask for an advisory opinion [from the Ethics Commission].”
The campaign would not say whether it actually would seek the opinion.
Deal’s campaign pays North Georgia Aviation, a company the former congressman co-owns with a business partner, Ken Cronan. The company does not own an airplane or a helicopter. Instead, North Georgia Aviation is the partial owner of two companies that own a helicopter and an airplane that ferry Deal to campaign stops throughout the state.
The payments to North Georgia Aviation are recorded on his campaign finance reports as the “fixed cost” for aviation or for “operating costs” for aircraft. North Georgia Aviation is a subsidiary of Gainesville Salvage & Disposal, which Deal co-owns with Cronan.
The arrangement is both complex and unusual in Georgia politics and has led Deal to spend more on airfare than any other gubernatorial candidate since 2002, according to campaign finance reports. It could also pose an ethical problem for Deal if the candidate benefited personally, said Yasha Heidari, a former legal counsel to the State Ethics Commission.
In this case, Deal’s campaign is offsetting expenses his company would otherwise pay.
“It could be argued that the payments ... provide an unlawful or illegal personal benefit,” said Heidari, now in private practice in Atlanta.
Heidari, however, said it’s unclear whether the Deal arrangement crossed the line. It is legal in Georgia for candidates to buy services from companies they own, so long as the services are legitimate and the rates are standard.
Another ethics expert who has done work for Deal’s campaign said the arrangement could be within state rules.
The airplane is owned by the Gainesville-based HRPW Investments, according to Federal Aviation Administration records. The official address of the company is Riley’s home. Riley, who was Deal’s chief of staff in the U.S. House, is a former part owner of HRPW. Many of the other member-owners of the company are major donors to Deal’s campaigns, including Philip Wilheit Sr., who is chairman of Deal’s statewide campaign.
Efforts to reach Wilheit were unsuccessful.
The helicopter the campaign uses is owned by PWWR, a limited liability corporation also headquartered at Riley’s home. Riley was once a member-owner of PWWR, but now he just manages operations for both it and HRPW. He is not paid for the service.
North Georgia Aviation is part owner of both companies.
Riley has served as Deal’s pilot since Deal was in Congress, where he served from 1993 to March of this year. U.S. House records show that from 2002 through 2008 Deal paid more than $300,000 in taxpayer funds to Chattahoochee Logistics, a company Riley created, for the cost of flying to official events in Deal’s North Georgia congressional district.
In 2008, however, Chattahoochee Logistics reimbursed the U.S. House for $80,000 after a change in congressional rules governing official use of private aircraft. Deal’s staff, in an internal audit, questioned whether the congressman was correctly calculating air travel expenses under the new rules. After consulting with House administration, Deal voluntarily returned the money. Riley said he never made money off the arrangement, which ended after North Georgia Aviation was created.
North Georgia Aviation and the other co-owners of the airplane and helicopter pay the same $6,000 a month in fixed costs for the aircraft, money that provides them access to each, Riley said. Fixed costs often include things such as loan payments, insurance, annual inspections, taxes and hangar fees. Deal’s campaign would not provide details of what the actual fixed costs are.
In addition, the owners pay operating costs — fuel, landing and gate fees — each time they use one of the aircraft.
Since Deal began his bid for governor, Riley said, his campaign has taken over North Georgia Aviation’s monthly fixed-cost payments.
“When we started this practice in May 2009, we decided that Deal for Governor would pay its own way in use of aircraft,” Riley said. “We would pay the fixed cost in addition to operational costs.”
Since most candidates in statewide races don’t own planes, they have to charter planes or rely on wealthy donors who are willing to donate their plane’s use. But that is considered an in-kind contribution and is subject to the same limit — $6,100 per campaign cycle — as a regular cash contribution.
For example, Barnes, the former governor now seeking a return to power, has spent slightly more than $16,000 on air travel since his campaign began July 1, 2009. All of it has been as direct expenditures, meaning the campaign hired or rented a plane. In Barnes’ failed 2002 re-election bid, he spent $43,000 on airfare and received $3,000 in in-kind contributions for air travel.
Deal’s campaign said its system is a “financial burden,” but it said having a plane and a helicopter on retainer allows Deal “to get around the state frequently and cover more ground than in the car,” Riley said.
The State Ethics Commission has guidelines for the use of noncommercial aircraft. For a single-engine turboprop plane, such as the plane Deal’s campaign uses, the commission says a campaign should pay a minimum of $2.50 per mile or $500 per hour.
Riley said the campaign is actually paying $650 an hour for the use of the airplane.
Heidari, the former legal counsel to the State Ethics Commission, said he could “see both sides of the coin” when it comes to whether Deal’s actions are questionable.
For example, say a candidate owns an office building. The candidate can lease the building to his campaign if the rent is of fair market value and is an “ordinary and necessary” expense for the campaign. But, Heidari said, if the candidate rents a 40-story tower he owns to his campaign, but the campaign only uses one floor while the rest of the building is vacant, that would be a problem. It would not be “ordinary and necessary” for the campaign to rent a 40-story building and use one floor.
“It does appear Deal is getting some tangible benefit out of this, being that he wouldn’t have to pay out of pocket,” Heidari said. “That’s a red flag.”
The fact that Deal’s campaign pays a $6,000-a-month fixed cost to North Georgia Aviation could also be problematic, he said. The operational costs are clearly ordinary and necessary expenses for a campaign, Heidari said, but it’s questionable whether the monthly fixed-cost payments are.
Also, he said, the ethics law requires candidates to disclose the ultimate recipient of campaign expenditures. In other words, Deal should disclose that North Georgia Aviation forwards the money it receives from Deal’s campaign to the two companies that own the aircraft, Heidari said.
That requirement is there to ensure the public can see where campaign funds ultimately end. For example, if a tobacco company owned the airplane Deal used, “people would want to know that,” Heidari said.
But Rick Thompson, a past executive director of the State Ethics Commission now in private practice, sees it differently. Thompson, who has done work for Deal’s campaign unrelated to the aircraft agreement, said it appears Deal’s campaign is paying “fair market value” for the use of the helicopter and airplane. In other words, the campaign says it’s not paying less than the other members of the two companies for access to the plane and helicopter. The campaign is also not overpaying, Thompson said.
The real question, Thompson said, “comes down to who is using the plane.”
Because Deal’s campaign is covering North Georgia Aviation’s monthly fixed-cost expense, Deal’s private business — Gainesville Salvage & Disposal — should not be using the plane without paying additional money, Thompson said.
“If they’re not, if it’s just for Deal to use because of his campaign, it’s right where it needs to be,” he said. “They’re getting no benefit from it.”
Riley said the salvage business, as owner of North Georgia Aviation, continues to have access to the plane, but he does not believe, although he’s not positive, that the plane has been used for Deal and Cronan’s business.
Members of HRPW still have access to the airplane, Riley said; the same is true for member-owners of the helicopter.
Aviation experts said multimember LLCs are a common way for several individuals or companies to share an airplane.
“It’s not uncommon for a company to be used as a mechanism for co-ownership,” said Jonathan Levy, legal director of Advocate Consulting Legal Group of Naples, Fla., a firm that specializes in aircraft transactions.
Corporate records filed with the Georgia secretary of state identify HRPW’s original partners, although not for PWWR. The original partners in HRPW Investments, except for Riley, are contributors to Deal’s campaign: Wilheit; James Hough, president and chief executive of a company that manages quick-service and fast-food restaurants in mall food courts and airports; and Dr. Larry Jeffrey Payne, an ophthalmologist and medical director of North Georgia Eye Clinic.
Efforts to reach the three were unsuccessful.
Wilheit owns Wilheit Packaging, a manufacturer of waxed-lined boxes for the poultry industry. The Wilheit family, its company and employees of the business have donated more than $53,000 to Deal’s campaign, according to the State Ethics Commission.
Wilheit has supported Deal since 1999 and served as the treasurer of past congressional campaigns.
He also is a founding director and former chairman of Gainesville Bank & Trust. The bank was the original lender to Wilder Outdoors Inc., the sporting goods company that Deal supported and co-owned with his daughter and son-in-law. The store went out of business and Deal now faces more than $2 million in outstanding loans for the failed enterprise.
Hough, a former banker and a director of Chattahoochee Bank of Georgia, gave to Deal’s congressional campaigns in 2004 and 2008 and contributed $1,750 to his gubernatorial campaign.
Payne has given $3,000 to Deal’s gubernatorial bid.
There are more partners in HRPW, but their names are not public record. Riley said that after North Georgia Aviation was created in 2007, HRPW expanded its membership and bought the current plane.
Key players and information
● The airplane Deal’s campaign uses is a 2002 Pilatus PC-12/45.
It is owned by HRPW Investments of Gainesville.
● HRPW is owned by several other individuals and limited liability corporations, including North Georgia Aviation.
● North Georgia Aviation is owned by Gainesville Salvage & Disposal, which is owned by Deal and business partner Ken Cronan.
● Gainesville Salvage & Disposal is the company that had a no-bid agreement with the state to provide space for inspections of rebuilt salvaged automobiles, an arrangement that led to a congressional ethics investigation that found Deal likely violated federal rules.
● Other original owners of HRPW include top donors to Deal’s campaign.
● The helicopter Deal’s campaign uses is a 2006 Robinson R44 II.
● It is owned by PWWR LLC of Gainesville.
● It is unclear who owns PWWR, but North Georgia Aviation is one owner-member.
How we got this story
The unusual nature of how Nathan Deal’s campaign for governor pays for flights on private aircraft stood out on his campaign finance reports. A reporter began investigating, and using records from the Federal Aviation Administration, the Georgia secretary of state’s office, the State Ethics Commission, the Federal Election Commission and the U.S. House of Representatives pieced together the key elements. Multiple interviews followed with Deal’s campaign and experts in Georgia’s ethics laws and aviation ownership.
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