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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.

Naomi Osaka eliminated from Olympic tennis tournament in Tokyo

Czech 42nd-ranked Marketa Vondrousova (L) shakes hands with Japan's Naomi Osaka after their Tokyo 2020 Olympic Games women's singles third round tennis match at the Ariake Tennis Park in Tokyo on Tuesday. Photo: Giuseppe Cacace/AFP via Getty Images

Naomi Osaka was eliminated from the Olympics after losing her Tokyo tennis tournament match 6-1, 6-4 in the third round to Czech Marketa Vondrousova on Tuesday.

Of note: Japan's Osaka is the women's world No. 2, while is Vondrousova ranked No.42.

Drought pushes 2 major U.S. lakes to historic lows

Kayakers at a boat launch ramp Page, Arizona, on July 3, which was made unusable by record low water levels at Lake Powell as the drought continues to worsen near. Photo: David McNew/Getty Images

Two significant U.S. lakes, one of which is a major reservoir, are experiencing historic lows amid a drought that scientists have linked to climate change.

What's happening: Lake Powell, the second largest reservoir in the U.S., has fallen 3,554 feet in elevation, leaving the crucial reservoir on the Colorado River, at 33% capacity — the lowest since it was filled over half a century ago, new U.S. Bureau of Reclamation data shows.