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Mike Hubbard Had 100,000 Reasons to Sell Alabama Out

The corruption trial of the Alabama speaker has showcased his insatiable hunger for cash.

This is the third in a series of articles on the trial of Mike Hubbard. Read the other installments here: part one; part two; part four; part five.

Alabama Speaker Mike Hubbard and his chief of staff, Josh Blades, stood at a voting station on the House floor and stared at the three buttons before them—green for yay, red nay, white for abstain. It was late April, near the end of the 2013 legislative session, and it was time for the state’s representatives to perform their most basic duty: vote on a budget.

“What do you think I should do?” Hubbard asked his top aide.

“Don’t do it,” Blades said. “Don’t vote, or vote ‘abstain.’”

Blades told this story and more last Wednesday as he testified in Hubbard’s criminal trial in Lee County, Alabama. He told the jury, “I was afraid there could be legal implications” if his boss were to push the green button. “I was afraid Mike could be in legal trouble.”

Blades’s testimony provided the most dramatic and damning moments in the first week of the trial, which is expected to continue into mid-June. But it wasn’t the only evidence showing that Hubbard’s friends and associates warned him not to do the things that led to him being indicted on 23 felony counts by a grand jury, including accepting about $420,000 a year in consulting contracts from a variety of companies that employed lobbyists—in direct contravention of ethics laws that Hubbard passed in 2010.

Emails released by the prosecution show Hubbard pleading with former Governor Bob Riley, his mentor and now a registered lobbyist, to help him make money. The exchange happened in September 2011, less than a year after both men worked together to pass those strong new ethics laws, one of which forbids elected officials from asking lobbyists, or anyone who employs lobbyists, for anything of value.

“I feel frustrated and confused because I am about to be 50 years old in February and I feel lost,” Hubbard wrote. “The company I built from scratch has now been sold twice and I am not a part of it. My current company is simply employing people because I am putting no effort into running or growing it. And now I feel like I’m spending my time on political matters while watching myself collapse—and unable to do anything about it.

“To be honest, I feel like I am failing my family by sacrificing the opportunity to make money in favor of a job that costs me money and a lot of grief. What’s scary is that I enjoy it and I think I’m pretty good at it!”

“I understand—believe me—I went 14 years on a Gov payroll and it was a challenge,” Riley replied, adding a warning: “Now and from now on you and I are going to be suspect in everything we do.” The “question now is DO YOU ‘WANT’ to be Gov ---- or--- make alot [sic] of money: good thing is you could do either but I am not sure it’s possible to do both.”

Misgivings about Hubbard mixing politics and business were expressed well before he became speaker. On the witness stand, John Ross, who was executive director of the Alabama Republican Party when Hubbard was chair, testified that he voiced concern when “the chairman told us he wanted to use” his company, Craftmaster Printing, to produce mailers for Republican candidates across the state in the party’s successful 2010 campaign to take control of the state legislature. (Alabama’s ethics laws forbid the chair and vice chair of any political party from directing party money toward themselves or any business they own or are employed by.)

Ross was one of two witnesses called on opening day on May 24, both of whom testified that they helped Hubbard steer party money—which, as chairman, he controlled—to his own businesses, and also helped him hide the scheme by funneling the money through other businesses. One was Majority Strategies, a Florida political marketing firm that has worked for Republican candidates nationwide, including Mitt Romney in his 2012 bid for the White House. Under Hubbard’s leadership, the state party paid Majority Strategies $800,000 during the election cycle, and the Florida company in turn spent more than $700,000 of that at Hubbard’s print shop.

Majority Strategies wasn’t particularly thrilled with the arrangement. During Ross’s testimony, the prosecution entered into evidence emails from the company’s owner, Brett Buerck, stating that he wouldn’t mind using Craftmaster “if their prices were more in line with what we pay other places. … Based on a message I got from Hubbard last night, our relationship relationship [sic] with them is still very tenous [sic]. And because I am a greedy bastard I would rather us swallow our pride and also make a lower profit margin in order to keep the client rather than getting black-balled in a state because we think the printer is making too much money and we don’t like being forced to use them.”

Amid the back and forth, Hubbard stepped in with an email to Ross. “I am going to pay a printing company I own part of DIRECTLY,” he wrote. “Not through a company that is ungrateful for business and insists on being difficult. Is that clear to everyone?”

The second witness, Tim Howe, a Montgomery lobbyist and political consultant, testified that he and one of his companies served as a “pass through” for Republican money to be spent at another business Hubbard owns, Network Creative. The work was ostensibly to purchase TV and radio ad time, a service for which media buyers charge a standard 15 percent fee, but Howe told the jury he only charged 5 percent, and he didn’t buy any ad time—Hubbard’s company did.

“You were a conduit for the money,” Deputy Attorney General John Gibbs asked.

“Yes,” Howe said.

Asked if he had any concerns about this arrangement, Howe replied, “I mean, it was something we ultimately agreed to.”

During cross-examination, Hubbard’s lead attorney, Bill Baxley, conceded all the facts of the testimony, as he would continue to do throughout the first week of the trial. He didn’t try to dispute any of the specifics of the arrangement, but instead asked Ross if the party had used Craftmaster and Network Creative before and after Hubbard was chair of the party. Ross said they had. And he asked both witnesses if the campaign was successful, and both acknowledged that it was indeed.

“And in 2010 you were proud of what you accomplished?”

“Yes sir, still am.”

“Craftmaster Printers did a good job?”

“Yes, sir.”

Both also testified about their involvement in the one charge that Hubbard might well have the most difficulty shaking: that he voted for a bill that gave a monopoly over the state’s Medicaid prescription drug program to a company with which Hubbard had a $5,000-per-month contract. But it was the testimony of Hubbard’s former chief of staff, Josh Blades, that fleshed the story out most fully, providing the jury and the full gallery of Judge Jacob Walker’s courtroom a riveting account of an alleged white-collar crime in devastating detail.

With preppy glasses and hair neatly combed to the side, Blades bears an uncanny resemblance to John Dean, who delivered damning testimony against Nixon in the Senate Watergate hearings. Deputy Attorney General Michael Duffy asked Blades to relate the events of April 2013, when the legislative session was nearing its end and state legislators were scrambling to make the state’s meager budget meet the basic needs of Alabamians. “No one wanted to raise revenues,” Blades said of the Republican-controlled House, so the hunt was on for places to cut.

One idea that the governor’s office was considering was the privatization of the prescription drug program under Medicaid, because it could potentially save the state tens of millions of dollars. But the scheme had drawbacks. It could make it difficult for Medicaid recipients, most of them children or elderly, to get the drugs they needed. And it could put small, independent pharmacists out of business.

A lobbyist named Ferrell Patrick got in touch with Blades, and said he had an idea that would solve the latter problem and help hometown pharmacists. He asked for a meeting with the speaker.

They met in the speaker’s conference room—Hubbard, Blades, Patrick, along with Ross, who was now a lobbyist subcontracting with Patrick. Also in attendance were Representatives Greg Wren of Montgomery and Steve Clouse of Ozark, both of whom Hubbard had appointed to leadership positions on the committee that oversees Alabama’s general fund budget. Patrick told them that he and Ross represented American Pharmacy Cooperative Inc., or APCI, an Alabama-based company that represents independent pharmacies across the state and country. Though APCI and its affiliates opposed the idea of privatizing the prescription drug program, Patrick said, they would change their position if they could receive the contract to run it.

The company had no experience running such a program, and Patrick told Hubbard and the others that they wouldn’t be able to save $20 million a year, which is what the governor’s office was hoping for with their plan. But they could probably save $10 million.

“Everyone in the room was in favor of it,” Blades testified. “It seemed like a win-win.”

But Hubbard had his own reasons for saving $10 million that went beyond closing holes in the budget. According to testimony, he was hoping to carve off $10 million that he could shift to the state’s court system, which was run by Roy Moore. (Moore is currently under suspension for ordering court officials statewide to disobey a mandate from the federal courts to grant marriage license to same-sex couples.) Hubbard—who at the time was the subject of a grand jury investigation—reportedly believed that if he could help Moore, Moore might be of help to him at some point in the future. The parties involved were on board with this plan, too.

“Everybody said, ‘OK let’s do it,’” Blades testified. “My job was to carry it out.”

The language, which amounted to 23 words, first came to Hubbard’s in-house legal counsel, Jason Isbell, by way of Rep. Wren and Patrick, the lobbyist for APCI. They’d handwritten it on a yellow legal pad, and Isbell typed it up verbatim. He didn’t much understand what it would do, he later testified in court, but he knew by its length and its introduction so late in the legislative session that the speaker would want to look at it.

Isbell took it to his boss, who was at his desk on the House floor. Hubbard read over it and gave him the go ahead, and into the bill it went. It passed quickly out of committee with no discussion.

So three legislators, two lobbyists, and a handful of staff privately decided, after the briefest of deliberations, to enact a policy that would give a $20 million monopoly over the state’s Medicaid drug business to a corporation that had no experience running such a program, a move that would impact the lives of the 600,000 poorest and least powerful people in Alabama—children, senior citizens, people with disabilities.

Blades testified that he saw nothing wrong with this at the time. “The sides we cared most about won,” he said.

But a week later, on the day the budget was coming up for vote, and with the House facing a hard deadline for its passage, Blades bumped into Ross, who asked if they could meet for a minute in Blades’s office. Ross shut the door behind him and revealed that Hubbard was on APCI’s payroll.

“I was upset,” Blades said to the jury. “I was upset because I played a role in what transpired that day, and what happened earlier.”

He went down to the House floor where he found Hubbard at his desk.

“Mr. Speaker, do you have a contract with APCI?”

“Yes,” Hubbard replied, but quickly added it was strictly for out-of-state work.

Blades told him that it was a problem, “at very least a perception problem,” and that he didn’t think they should move forward with the budget. Hubbard told him to try to take the language out, and Blades and Ross worked the floor, running from representative to representative. But they ran out of time, and the budget came up for a vote.

The two stood at the voting station, three buttons before them. Hubbard told Blades he had to vote for yes, that “it would raise too many red flags” if he didn’t. And he pressed the green button.

In the coming days, Hubbard’s team successfully worked with their colleagues in the Senate to get the language removed. During cross-examination at his trial, Hubbard’s attorney leaned into this, building an argument that if there’s no harm, there’s no foul. But Blades’s testimony about the APCI allegation wasn’t even the most explosive he would give.

After the vote, Blades asked his boss if he had other contracts. Hubbard said he did—one with the Southeast Alabama Gas District for $12,500 a month and another for $7,500 with an education concern called Edginuity. He didn’t mention a fourth, for $10,000 a month, with a man named Bob Abrams and his company, CV Holdings, which owned a business in Hubbard’s district called Capitol Cups.

A few months later, Hubbard asked Blades to do some work helping Abrams obtain a patent. The application was being held up by a patent committee, and on that committee sat a representative originally from Mississippi. Blades had gone to school in Mississippi, so Hubbard asked if he could use his contacts to get to the representative and see if he could move things along.

“Of course,” Blades said, and he quickly tracked down the lawmaker in question, who said he’d be happy to help. But it didn’t do much good, and the application lagged. Hubbard asked about it often, saying, according to Blades’s testimony, “It’s very important to him we get this done.”

“What else did Mr. Hubbard say?” a prosecutor asked.

Blades paused for a long, anguished moment.

“Mr. Hubbard told me he had 100,000 reasons to get this done,” he said.

After the judge excused the jury for a 10-minute break, Hubbard’s attorney, Baxley, clearly blindsided, asked Judge Walker to unseal Blades’s grand jury testimony, in a Hail Mary attempt to get the former chief of staff’s testimony impeached, but Walker calmly denied him.

As the week progressed, things got a little better for Hubbard, but not much. On Thursday, former State Health Officer Dr. Don Williamson contradicted all the witnesses on a couple aspects of the incidents surrounding the APCI charge. Most notable was his assertion that Hubbard said in a meeting that he was unaware that the language added to the budget bill would give a prescription-drug monopoly to his client. During redirect, and over numerous objections from Baxley, lead prosecutor Matt Hart tried to ask Williamson if anyone had pressured him to change his testimony, to no avail.

Regardless, the “100,000 reasons” moment was electrifying for everyone in attendance at the Lee County courthouse. With one sentence Blades wrote front-page headlines and leads for newspapers across Alabama. Even the conservative Montgomery news site Yellowhammer News, which has published hardly anything about Hubbard’s legal problems, wrote: “It is too early to make any predictions about the outcome of the trial, but one thing appears certain: Hubbard is irreparably damaged politically.”