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Retired general takes legal action against congressman over business selling t-shirts to troops

Rep. Pat Fallon (R-Texas) serves on House Armed Services Committee even as he lists ownership of firms doing business with the military, records show.

Published: November 11, 2021 6:20pm

Updated: November 14, 2021 11:01pm

A retired Army special forces general is taking legal action against Rep. Pat Fallon (R-Texas), alleging that the congressman has not lived up to a business deal they had to sell t-shirts to troops on a military base.

The action filed by retired Maj. Gen. Tim Haake in a local Texas court requests that the congressman be deposed, a first step under state law toward a potential lawsuit.

The court filing not only addresses the business dispute, it shines a light on the fact that Fallon, a member of the House Armed Services Committee, lists several businesses on his congressional financial disclosure form that are doing business with military installations selling t-shirts, according to the form and documents released by the Pentagon to Just the News. 

The Pentagon records state those businesses have already sold millions of dollars in t-shirts on the bases going back several years and that the most recent contract was signed in February, after Fallon joined Congress as a freshman.

Fallon declined through his spokesman, Austin Higginbotham, to comment or answer whether the congressman told House Republican Leader Kevin McCarthy or Rep. Adam Smith (D-Wash.), the committee's chairman, about his military contracts before accepting his committee assignment. Smith's office did not return a call this week seeking comment.

James Thurber, an American University professor, said Fallon's businesses and committee assignments posed a conflict of interest though in his opinion not necessarily illegal.

"I am strict in cases like this," said Thurber. "It is definitely a conflict of interest. What if he was a major owner of Boeing. That would clearly be a conflict. T-shirts vs. airplanes. It is only a matter of scope. At a minimum, he should put the company in a blind trust. It is legal but unethical."

Haake's lawsuit, filed in Denton County, Texas, seeks information and deposition testimony from Fallon and his wife, Susan, regarding the t-shirt business sales with U.S. Army Fort Benning in Georgia, alleging the congressman refused to supply financial information to his business partner in violation of their business agreement. 

According to the lawsuit, Haake is supposed to receive 10% "profits interest" in Recon Sportswear and Jackets, LLC and the American Airborne Store, and "is entitled to a 10% 'capital interest'" in any business Fallon or his affiliates start with Ft. Benning.

Additionally, the retired general "is entitled to receive certain consulting fees, which fees are calculated as a percentage of the aggregate gross revenues derived from the operations of all of the Ft. Benning Companies," the suit claims.

Haake's lawsuit said he is concerned Fallon may have committed "fraud, breach of fiduciary duties, tortious interference with Petitioner's contractual relationships, and breach of the [business] Agreement."

In December 2020, as Fallon was about to take office, the soon-to-be-congressman offered to buy out Haake in both his "ownership interest in the Ft. Benning Companies" and his "rights to consulting fees," the suit states. The lawsuit also claims alleges that the congressman explained to Haake that he was planning to liquidate "all of his ownership interests in the Ft. Benning Companies and sell such interests to his relatives" in order to comply with the House of Representatives' ethics rules before being sworn in January 2021. 

The lawsuit states that Fallon "intimated" that if Haake refused to agree to sell his interest, the former "could cancel the contract and re-submit" it without Haake, which would violate their business agreement. The buy-out discussions fell through by January, the suit said. 

In December, Haake began investigating the businesses at Fort Benning to determine the value of his ownership interests, if he was owed anything for his ownership interest, and if everyone in the agreement was complying with its obligations, according to the lawsuit. 

The general requested "a full audit and accounting of the books and records of Recon and American Airborne," but Fallon did not comply, the suit alleges. 

Haake also claims to have learned through his investigation that Fallon had started other businesses at Fort Benning — Virtus Apparel, LLC, A-2 Screen Printing, LLC and Scouts Out — allegedly without informing him or providing his ownership interests and consulting fees, even though he was required to according to their business agreement. 

In his financial disclosure form filed to the House ethics office in August, after a three-month delay, Fallon listed ownership in several of the t-shirt firms listed in the lawsuit. Just the News filed a Freedom of Information Act with the Pentagon's Army & Air Force Exchange Service (AAFES) and received copies of several contracts those firms in Fallon's ethics report have on bases.

For instance, PC Gear Texas GP LLC in Boerne, Texas, listed on Fallon's form, which has a slightly different name and address than the PC Gear LP in San Antonio (which is about a 30-minute drive from Boerne) listed in the AAFES contract, is estimated to make $13,980,000 in sales on a five-year contract it has for Lackland Air Force Base. The most recent contract in the Fallon records released by DOD involved the firm Fast Break Sportswear LLC and was signed on Feb. 26, 2021.

Two people directly familiar with Fallon's businesses told Just the News the Lackland base contract is with the congressman's company.

In May, after multiple requests from Haake, Fallon allegedly told him for the first time that he had transferred his own ownership interest to his wife, Susan. The lawsuit claims that if this occurred, it would also be in violation of their business agreement, as Fallon was required to inform Haake of any such action before taking it, the suit claimed. 

Haake retired as a two-star general who began his military career as an enlisted soldier in the Army National Guard Special Forces unit before graduating law school at Syracuse University. He was directly commissioned as a captain in the Army JAG Corps and remained in Special Forces for the rest of his military career. 

He formerly served as director of legislative affairs, U.S. Special Operations Command in Washington, D.C.; deputy commander, mobilization and reserve affairs, U.S. Special Operations Command in Tampa, Fla.; and legal advisor to Joint Special Operations Command at Fort Bragg, N.C., according to his bio on his law firm's website