By: Justin Miller/TexasObserver
One of the biggest beneficiaries of the governor’s pandemic and Operation Lone Star disaster declarations has now kicked Abbott a cool $250,000.
Few have benefited more from Governor Greg Abbott’s never-ending disaster declarations than Matthew Michelsen, a longtime venture capitalist who’s palled around with everyone from 50 Cent and Lady Gaga to right-wing financier Rebekah Mercer..
Early in the COVID-19 pandemic, Michelsen and his newly founded company Gothams LLC uprooted from California and moved to Austin. Soon, his disaster logistics firm had become one of the largest contractors for Texas’ COVID-19 response—and, later, for Abbott’s multi-billion dollar border security scheme Operation Lone Star.
Now, Michelsen has joined the ranks of Abbott’s big donors, giving his campaign a total of $250,000 in August, September, and November, according to state campaign finance records.
While that sum is a relatively small drop in the bucket of a campaign that now regularly receives $1 million checks, it’s a sign that Abbott is willing to cash in on those who’ve profited from his constant states of disaster, which give the governor and state agencies expansive authority to direct emergency responses with few restraints. Abbott’s COVID-19 disaster declaration is still in effect, despite his having ditched public health restrictions long ago. His border security disaster declaration has been in effect since May 2021—and, despite nearly quintupling state spending on border enforcement, migrant encounters are higher than when Operation Lone Star began.
Since 2020, Gothams has been awarded hundreds of millions of dollars in state funds to supply COVID tests, to operate mobile antibody infusion sites, and to build and staff makeshift detention facilities for migrants swept up by Abbott’s massive border dragnet, state records obtained by the Observer show. Thanks to Abbott’s disaster declarations, these huge sums of state funds have been doled out without the competitive bidding processes and oversight that Texas agencies must otherwise follow.
The fast-and-loose style of the state’s prolonged disaster contracting has drawn scrutiny and scorn. “He’s just abusing emergency powers at this point,” state Rep. Mary Gonzalez, vice-chair of the House Appropriations Committee, told the Houston Chronicle in April. “When we’re spending this amount of taxpayer dollars, it’s important for us to honor our constituents with transparency and accountability.”
The Texas Division of Emergency Management (TDEM), which Abbott has charged with administering most pandemic and border security disaster funds, has defended its process and said it’s the only way to quickly respond to a disaster.
In the early days of the pandemic, states and the federal government were desperate for COVID tests—and lots of them. Michelsen’s disaster logistics firm, Gothams, quickly became a major supplier of tests from a new healthcare startup Curative. Curative had recently secured an emergency authorization from the FDA for its proprietary oral test kits. Michelsen is an investor and executive chairman of Curative, and says he “responded to an emergent coronavirus pandemic in 2020 by supporting a little-known COVID-19 detection company into the massive test provider it is today.” In late April, TDEM paid Gothams over $400 million to supply Curative tests and lab services.
In January of 2021, the FDA flagged Curative’s tests as potentially faulty, at “risk of false results, particularly false negative results.” The federal agency eventually rescinded its emergency authorization at Curative’s request. “The test was superior but we caved to the FDA,” Michelsen told the Chronicle. “It should have been a scientific test, not a political test.”
The state stopped buying Curative tests after the FDA warning, but still continued paying Gothams to supply other COVID tests, state purchase order records show.
In response to prior scrutiny of the state’s disaster contracts, the governor’s office has stated that Abbott is “not involved” in agency contracting. However, records obtained by the Observer through an open records request indicate that Abbott’s chief of staff was aware of Curative and Gothams in the days before the state awarded the contract.
On April 27, Abbott’s chief of staff Luis Saenz received an email to his personal account from longtime Republican operative Steve Munisteri with attachments that included “Gothams Curative COVID-19 Brief,” according to records obtained from the Governor’s office. The brief outlined COVID-19 testing and capabilities and contracts the firms already had with Los Angeles, Florida, and the U.S. Air Force. Two other people were copied on the message but it’s not clear who they are because the governor’s office redacted their email addresses. Abbott hired Munisteri as a senior advisor in December 2020.
When Abbott pivoted to providing monoclonal antibody therapy last summer, the state awarded Gothams contracts to set up and run mobile infusion clinics in several counties across Texas. The infusion operation wound down recently after over a year. During that time, Gothams was paid as much as $2.5 million a month to operate individual sites, TDEM purchase records show.
This January, Abbott ramped up the scale of Operation Lone Star’s dragnet targeting male migrants with criminal trespassing charges, his roundabout way for the state to enforce federal immigration law. The state awarded Gothams a $43 million contract to build its second makeshift holding facility in Jim Hogg County. Arrested migrants are brought there for processing and arraignment and held for as long as 48 hours before getting transferred to jail in retrofitted state prison units. The $43 million cost that Gothams proposed to build and staff the facility for a year was twice as much as the state’s first processing center, built by other companies in Val Verde County. While other contractors bid for the second project, TDEM said Gothams’ plan was the only one that met the specifications required by state jail regulations.
All told, Gothams has received a total of $563 million from Texas since 2020 for COVID- and border-related services, according to state government expenditure records.
Curative, the healthcare startup of which Michelsen is an investor and executive chairman, has more recently pivoted from testing to the world of health insurance. The company will provide what it describes as monthly subscription-style coverage plans with “$0 copay and $0 deductible.” Curative, which was recently certified by Texas insurance regulators, is launching first in Travis and Williamson Counties.
Michelsen is part of a wave of venture capitalists who have absconded from Silicon Valley to set up shop in Austin. He owns a multi-million dollar Italian villa-style mansion overlooking Lake Travis, property records show. An LLC linked to him also recently bought a historic landmark building in downtown Austin that houses Gothams’ offices. Now, Michelsen is getting active in Texas politics for the first time. His first campaign contribution, five months before he began supporting Abbott, was for $50,000 to Texas Comptroller Glenn Hegar in March of this year.
More recently, along with his contributions to Abbott, he’s given $25,000 to Republican Williamson County Judge Bill Gravell and Democratic Travis County Judge Andy Brown. He also gave Florida Governor Ron DeSantis—a potential Abbott political rival—$25,000 in September. Florida awarded Gothams about $300 million in pandemic contracts,state contract records show.
Michelsen did not respond to the Observer’s emails and phone call requesting comment. Governor Abbott’s spokesperson Renae Eze referred the Observer to Abbott’s campaign without addressing the questions sent. The Abbott campaign did not respond.
This article has been updated to include the latest state campaign finance filings, which show that Michelsen gave another $100,000 in contributions to Abbott in October.