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Sen. Susan Collins. Photo: Sarah Silbiger/Getty Images

The FBI is investigating what it describes as a massive scheme to illegally finance Sen. Susan Collins' 2020 re-election bid, Axios has learned.

What's happening: A recently unsealed search warrant application shows the FBI believes a Hawaii defense contractor illegally funneled $150,000 to a pro-Collins super PAC and reimbursed donations to Collins' campaign. There's no indication that Collins or her team were aware of any of it.

  • Collins helped the contractor at issue, then called Navatek and since renamed the Martin Defense Group, secure an $8 million Navy contract before most of the donations took place.
  • Former Navatek CEO Martin Kao was indicted last year for allegedly bilking the federal government of millions in coronavirus relief loans.

What they're saying: "The Collins for Senator Campaign had absolutely no knowledge of anything alleged in the warrant," Collins spokesperson Annie Clark told Axios in an emailed statement.

The big picture: Federal prosecutors say Kao used a shell company to funnel $150,000 in Navatek funds to a pro-Collins super PAC called 1820 PAC.

  • According to the FBI, Kao and his wife set up a sham LLC called the Society for Young Women Scientists and Engineers. Navatek then wrote the LLC a $150,000 check, investigators say, which was passed on to the super PAC.
  • Government contractors are barred from donating to federal political committees, and investigators suspect the donations were attempts to evade that prohibition.

Investigators say bank records also show that Kao illegally reimbursed family members who donated to Collins' campaign and that Navatek reimbursed some of Kao's colleagues for their contributions.

  • That's known as a "straw" donation, and it's prohibited by law. The Collins campaign's fundraising solicitations also require donors to certify that they are in fact donating their own funds.
  • The allegedly reimbursed donations came in clusters, according to federal contribution records, between June and September 2019, and amounted to less than 0.2% of the Collins campaign's total fundraising.
  • The warrant application quotes an email exchange between Kao, who had just maxed out to Collins' campaign, and the senator's Maine finance director: "If you have friends or family members that would be willing to donate please don’t hesitate to send them my way," the Collins staffer wrote.

Read the search warrant application:

Editor's note: This story has been updated with comments from Collins' spokesperson.

Go deeper

DOJ signals scrutiny of popular fundraising gimmick

Illustration: Shoshana Gordon/Axios

A little-noticed line in a recent criminal filing suggests federal prosecutors consider a popular political fundraising tactic to be legally questionable.

Why it matters: Fundraisers often boast of "5x" or other contribution matches to coax small-dollar donations. The Justice Department indicated in a court filing Monday this could amount to "material misrepresentations" if, as critics often contend, there's no evidence the match ever occurs.

Why 401(k) rollovers are so annoying

Illustration: Aïda Amer/Axios

If you happened to change jobs recently, you may have tried to transfer your retirement account from your former employer into an Individual Retirement Account or your new employer's 401(k) plan. If so, you probably encountered a bureaucratic gantlet — and you're not alone.

Why it matters: Kludgey processes around retirement account transfers result in people losing track of their funds, giving up important tax advantages, or otherwise disadvantaging themselves and being less prepared for retirement.

The hard math behind America's labor shortage

Data: Bureau of Labor Statistics, Congressional Budget Office; Chart: Axios Visuals

Yes, the pandemic has created unusual temporary labor market dynamics. But in the bigger picture, the 2010s were a golden age for companies seeking cheap labor. The 2020s are not.

The big picture: In the 2010s, the massive millennial generation was entering the workforce, the massive baby bo0m generation was still hard at work, and there was a multi-year hangover from the deep recession caused by the global financial crisis.