Nevada congressional candidate sues consulting firm for campaign assets

A Republican candidate for Congress is accusing a political consulting firm of withholding his campaign materials despite his termination of a contract with the company.

Noah Malgeri, who is running for Nevada’s 3rd Congressional District, is suing McShane LLC to regain access to campaign information such as his budgets, emails, campaign plans, polling data and login information for websites and social media accounts. Malgeri said he has already paid for the material, but the company said he has not paid his bill in full.

The lawsuit, filed Dec. 3 in Clark County District Court, accuses McShane, a prominent political consulting firm, of illegally withholding assets and enriching itself by charging more than $4,700 for a fundraising plan it failed to execute.

Malgeri said the company is trying to use his active political campaign as leverage to force him to pay for the return of his property.

“It’s highly unethical and unprofessional,” Malgeri said.

But Rory McShane, principal of the firm, said his company isn’t withholding Malgeri’s personal property, as the lawsuit alleges.

“I am not giving over my intellectual property to a client who has not satisfied their contract,” he said.

Brian Hardy, the company’s lawyer, said in a statement that McShane LLC plans to file counterclaims in the coming days.

“What is truly unfortunate is that this litigation will inevitably become the focus of his campaign and not the issues facing the voters he seeks to represent,” he said.

Malgeri’s claims prompted other McShane clients, including gubernatorial candidate Michele Fiore, secretary of state candidate Jim Marchant and congressional candidate Sam Peters, to release statements of support for McShane through his office.

The dispute also led to U.S. Rep. Paul Gosar, R-Ariz., revoking his endorsement of Malgeri in a statement released through McShane’s office. Malgeri said he does not think the statement about the endorsement revocation is true.

“He hasn’t told me that,” Malgeri said. “I just saw him over the weekend.”

Gosar’s chief of staff said the endorsement revocation statement was legitimate.

Early turbulence, suit alleges

Malgeri hired McShane’s firm for his congressional campaign in May, agreeing to pay $6,000 per month for consulting services and another $15,000 for a website and video. Relatively early on, Malgeri thought the company was failing to provide services at an acceptable level, the lawsuit states.

“Mr. Malgeri was left with the impression that Rory McShane and his team were negatively affecting Mr. Malgeri’s chances in the race,” the lawsuit states.

According to the lawsuit, it became clear to Malgeri that the company did not have the capacity or desire to improve its services, but instead was “simply committed to maintaining its ability to collect as many fees from Mr. Malgeri as possible.”

McShane, however, said Malgeri has a history of praising the company’s work, then taking issue with it when the bill came due.

At one point, Malgeri tried to cancel the contract, but reluctantly agreed to pay a reduced rate for use of McShane’s donor list and a reduced level of other services, according to the lawsuit.

Fundraising dispute

After Malgeri agreed to keep working with the company, Woodrow Johnston, vice president of McShane LLC, suggested Malgeri consider a proposal to raise as much money as possible for the fundraising quarter.

The plan called for the firm to execute a direct-mail program, robocalls and a digital campaign on Malgeri’s social media platforms with a goal of raising $40,000 in September.

Malgeri paid more than $4,700 for the plan, which the firm failed to carry out until at least mid-September, the lawsuit alleges. The plan raised no money beyond what Malgeri was able to raise on his own, according to the lawsuit.

McShane said the plan was supposed to make Malgeri’s fundraising efforts easier by educating major donors about his campaign, and that his firm did start executing the plan in the first week of September. Malgeri did raise money from the plan, but has not paid the company any commission, McShane said.

Contract termination

On Sept. 27, Malgeri told Johnston he was canceling his contract with the company. Johnston resisted, offering to accept $500 per month to be available for campaign-related questions, but no other services, according to the complaint.

“(Johnston) warned Mr. Malgeri that if he didn’t agree to the $500 fee in exchange for no services, McShane would sue Mr. Malgeri for the next (subsequent, unelapsed) month’s full fee despite the fact that no services for the subsequent month had been delivered, or were in any way solicited or desired,” the lawsuit states.

Malgeri refused the offer, and his requests to access his campaign assets have been unsuccessful, according to the lawsuit.

McShane said Malgeri’s contract requires him to give 30 days’ written notice before the termination can take effect, and that he is responsible for paying the bill.

The company offered to settle the dispute for about $3,200.

Contact Blake Apgar at bapgar@reviewjournal.com or 702-387-5298. Follow @blakeapgar on Twitter.

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