A Kansas Department of Commerce secretary in the administration of Gov. Sam Brownback was involved in secretly transferring a treasure trove of state data on thousands of Kansas companies, business executives and economic development specialists to the secretary's own private consulting firm.
The Topeka Capital-Journal confirmed through documents and interviews the previously unreported maneuver was linked to Antonio Soave, who led the commerce department from 2015 until he was ousted in 2017. The records implicated the state's top economic development official and some of his close business associates, including two who found their way onto the department's payroll. The business intelligence assembled and maintained at Kansas taxpayer expense was shared with Capistrano Global Advisory Services, which Soave operated as chairman and CEO.
So-called target files held financial, personnel and contact information on more than 10,000 businesses useful to Soave or any consultant in Kansas seeking investment capital or offering advice on merger, acquisition or relocation opportunities. The materials, some developed with the aid of the Kansas Department of Labor and incorporating information from the Kansas Department of Revenue, would have been difficult and expensive for outsiders to replicate.
Soave, who wasn't available for an interview, has maintained he was "very careful to comply with all existing policies" at the Department of Commerce. He defended the vigorous marketing strategies deployed while in charge of the agency. He also claimed to have helped Kansas create 10,000 jobs and $1.4 billion in capital investment during his only full year as secretary.
Emails pointing to Soave's involvement in movement of commerce department information outside boundaries of state government were recently obtained under the Kansas Open Records Act. The documents surfaced despite assurances from the Department of Commerce in 2017 that communications sought under KORA either didn't exist or couldn't be found.
Sen. Julia Lynn, Republican chairwoman of the Senate Commerce Committee, championed Soave's nomination three years ago. She hailed the depth of his business prowess and viewed his appointment as a "turning point for the department." In hindsight, the Olathe senator said, Soave engaged in a type of mismanagement that had no place in government.
"I guess I'm not surprised in that the Department of Commerce is run so loosely without oversight, and it has for many years," Lynn said.
Rep. John Carmichael, D-Wichita, said the possibility that Soave or others abused public resources for personal gain should be investigated to determine whether Kansas statutes were broken or ethical standards compromised.
"It appears Soave and his associates gained an unfair advantage through information released to private parties," said Carmichael, an attorney. "That property was intellectual property of the state of Kansas."
KBI takes interest
The information pipeline from the Department of Commerce in Topeka to Capistrano Global in Overland Park had origins in Soave's requests of department employees to extract business data from the agency's computers. Spreadsheets, reports and lists were forwarded to Soave's special assistant at the department, Michael Miravalle, who emailed files to Stefano Radio, who worked for Soave at Capistrano Global. Radio subsequently became a state contractor.
Interviews support claims that Soave dismissed warnings about exporting information to private business interests and people who weren't employees of the state.
Jessica Farrell, a former information technology administrator at the commerce department, said she pushed back against Soave's IT project proposals, specifically requests tied to the agency's database of businesses.
"Every state employee is trained not to release any data collected by and for the state of Kansas to any vendor, contractor or other unrelated state personnel unless otherwise stated differently in an MOU (memorandum of understanding) or other contract," Farrell said. "While it is not uncommon at all for a state agency to utilize private-sector contractors or vendors, there are certain statutes, rules and regulations that are followed in order to do so."
The Kansas Bureau of Investigation opened an inquiry into Soave's management activities at the commerce department in response to bipartisan pleas from state legislators. Attorney General Derek Schmidt signed a letter in 2018 in which he stated, "The KBI has determined to commence a formal investigation." It is unclear whether that KBI review has yet to close.
Soave, while still serving as commerce secretary, was instructed by officials in the Brownback administration to take down the business website for Capistrano Global after it was suggested Soave's personal entrepreneurial activities left an impression he wasn't giving full measure to the state agency. Soave responded by altering his company's internet domain name, which didn't nullify the online presence of Capistrano Global.
Capistrano Global remained operational during Soave's 21-month stint at the department. During this period, Soave pressured agency staff to integrate into the commerce department's Microsoft Dynamic database his personal collection of business contacts, including some from Italy and other countries considered of little use to Kansas economic development strategists.
The agency's database contained details of millions of dollars in tax incentives awarded to companies operating in Kansas. Emails obtained by The Capital-Journal didn't shed light on whether Soave, Miravalle, Radio or others engaged in transfer of that information.
Shown the exit
Soave eventually slipped out of favor among members of Brownback's inner circle, and it cost the secretary his $128,000 per year job with the state.
Spin was applied to Soave's departure with a June 2017 news release containing laudatory statements from Brownback about the secretary. The governor said he admired Soave’s "great vision" for the department. That sentiment mirrored thoughts shared by Brownback when he nominated Soave to the post in 2015 and reflected Brownback's interest in driving expansion of small businesses.
"He brings both enthusiasm for entrepreneurship and solid business experience that will benefit all Kansans," Brownback said.
Brownback soon walked back that praise and confirmed Soave was forced to resign, in part, because of the secretary's hiring of business colleagues and friends as consultants at the department, as well as concern about allegations of business fraud leveled against Soave.
Soave said he chose "amidst this extreme pressure" to leave the Cabinet rather than be fired by the governor. Soave also said he considered it an honor to serve as the agency's secretary while moving "Kansas forward through our extensive marketing and business-to-business efforts."
After leaving state government, Soave took a job with One Heart Project founded by a charity led by Steve Riach, who also owned a company paid $325,000 by Soave's commerce department to produce ads touting the state's business climate. Soave left that job after the revolving-door link between his government work and the new position was publicized.
Soave leapt into a GOP campaign for Congress in the 2nd District of Kansas serving Topeka, Ottawa, Pittsburg and Leavenworth. He pitched himself as a "Reagan Republican for Kansas." That campaign came to an end in 2017 after Soave engaged in "a great deal of prayer and contemplation."
It was a bruising tumble from the days when Brownback recruited Soave to run a key state agency and Soave earned unanimous confirmation from the Kansas Senate.
Sen. Gene Suellentrop, R-Wichita, said revelations about Soave had placed an exclamation point on leadership shortcomings at the agency. Suellentrop was in the House when Soave was nominated and had no vote on his confirmation, but referred to Soave as the "worst administration" appointment in his decade as a legislator. The senator said he considered Soave's handling of the Cabinet job to be a "huge disappointment."
Documents obtained by The Capital-Journal included emails linking Soave with Miravalle, Radio and other individuals with business ties to the secretary. The correspondence — much of it transpiring in 2016 — indicated Soave recommended those channeling the agency's business information to remain low key about their activity.
Miravalle, who earned $65,000 as a special assistant to Soave but lasted less than one year in the commerce department, touched upon their activities in an email to Radio, who was director of business development at Soave's Capistrano Global. In it, Miravalle relayed to Radio this admonition: "Antonio wants us to continue with our independent direct mail, but to 'keep it on the down low.' "
Radio was hired as a $3,500-per-month consultant at the commerce department. In emails, Radio presented himself as a special project consultant, an international liaison and a corporate liaison for the commerce department. An agency spokeswoman said standard personnel records on Radio weren't kept because he was a contractor rather than a state employee.
The email traffic showed Miravalle placed Radio, despite never rising above status as a contract worker, in charge of handling purchase on behalf of the state from Dun & Bradstreet of a bundle of information on chief executives of Fortune 1,000 companies and every CEO of a Kansas company with at least 25 employees. The salesman at Dun & Bradstreet raised a cautionary flag because Radio was using an email address at Capistrano Global — not the Department of Commerce.
"I just need to ensure this is a government opportunity as I am unable to sell outside of state and local government," said Dun & Bradstreet executive Jason Levine.
Miravalle replied that Radio was "on our team" at the commerce department and the business information would be used for the state's benefit.
Miravalle referenced in a May 24, 2016, email to Soave, Radio and others the existence of internal commerce department pushback about their means of entry to state business data. Miravalle said there was consternation "with us having access to their information. They are concerned that we will, one, mess up their workflow by mishandling their information and, two, have access to confidential information like Social Security numbers."
Soave's 'piggy bank'
Soave was sued in Johnson County District Court by Paola Ghezzo, who in 2015 invested $500,000 in Capistrano Italia-USA, an entity owned by Ghezzo and Soave to help Italian companies navigate markets in the United States and elsewhere. Ghezzo’s suit, filed two weeks before the announcement of Soave's departure from the Brownback administration, alleged Soave used the investment fund "as his own personal piggy bank" to support a lavish lifestyle.
The court file pointed to Soave intertwining private business with operation of the commerce agency. At one point, Soave paid himself a monthly Capistrano Italia salary of $8,000. In turn, Ghezzo was selected by Soave for a $6,000 per month job as a business consultant to commerce. She held the post for about a year.
District court records submitted by Soave asserted Ghezzo "lacked the expertise, experience, time, interest, discipline and entrepreneurial drive" necessary to lead their Capistrano Italia joint venture. However, Soave apparently believed Ghezzo had the skills to deliver for Kansas taxpayers as a consultant for the commerce department.
Soave said he agreed with Ghezzo that contacts made while a member of the Brownback administration "could prove lucrative to Capistrano Italia over time." District court records suggest the case was to have been dismissed in March.
At least one half-dozen people landed consulting contracts at commerce while Soave was in charge. Brownback’s chief of staff Jon Hummell told Soave to convert his stable of consultants into full employees of the state or end their contracts.
In 2018, the Kansas Legislature's auditing division considered reviewing whether Soave followed state law and policy in hiring staff and while handling personnel expenses.
Senate Minority Leader Anthony Hensley, D-Topeka, said he was assured by the Legislative Post Audit Committee's Republican chairman, Abilene Rep. John Barker, that audits related to both issues would be performed. However, GOP members on the House-Senate panel blocked both. Hensley forwarded his call for a "forensic investigation" of Soave to the attorney general.
"These are, if not unethical, could even be illegal actions that he took," Hensley said.
He said Kansas law considered "official misconduct" to include use of confidential information acquired in the course of employment for private gain. The senator said law on "misuse of public funds" could apply to Soave's decision to employ Ghezzo, his Capistrano Italia partner, as a department contractor.
"It is unclear whether Ghezzo was given access to any confidential or proprietary information that she could, and possibly did, misappropriate for her and Soave's personal gain," Hensley said.
New look for agency
David Toland, the choice of Gov. Laura Kelly to operate the Department of Commerce, got a taste of the political side of the state agency responsible for inspiring economic growth. While most Senate confirmation hearings go off without a hitch, the intense two-day vetting of Toland began with questions about his economic development work in Allen County and reflected deep anxiety about the leadership of past commerce secretaries.
Kelly defended her nominee as the "best and brightest this state has to offer. His energy, expertise and collaborative style will ensure that businesses have the partner they deserve."
"I'm here to make a hard break from the culture that we saw in the past several years in this agency," Toland said.
He said the agency's employees needed a work environment that empowered them to speak up if they observed something amiss and to guarantee the department was a good steward of public dollars.
"We're trying to ensure we don't have a climate of fear, but rather we have a climate of ethical behavior and transparency and of making sure we're effective in the things that we do," Toland said.