Enron Accounting at the NRCC
While I was buried in the White House’s amazing email fraud yesterday, the Politico posted an article further developing the NRCC accounting story. The Politico describes three roots to the accounting fraud. The NRCC no longer required executive committee approval for certain expenditures, it consolidated all its accounts, and it permitted people to work outside the NRCC.
Under Virginia Rep. Tom Davis and New York Rep. Thomas Reynolds, who chaired the committee from 1999 until the end of 2006, the NRCC waived rules requiring the executive committee — made up of elected leaders and rank-and-file Republican lawmakers — to sign off on expenditures exceeding $10,000, merged the various department budgets into a single account and rolled back a prohibition on committee staff earning an income from outside companies.
These changes gave committee staffers more freedom to spend money quickly and react to a shifting political landscape during heated campaign battles, and House Republicans were able to claim larger majorities after the 2000, 2002 and 2004 elections.
The article goes on to provide a few details that–along with an admittedly amateur review of the FEC filings involved I did–sheds further light on what’s going on.
In another decision that has become controversial, the NRCC began, during Davis’ chairmanship, to allow its staffers to earn outside income. Taking advantage of that change, Ward founded Political Compliance Services in 2001 with Susan Arceneaux, helping dozens of lawmakers and congressional candidates comply with Federal Election Commission laws. The two severed their ties earlier this year, a lawyer for Arceneaux said.
Ward wasn’t alone in seeking outside income. Don McGahn, the NRCC’s longtime counsel, was retained by numerous Republican campaigns and leadership PACs, helping those organizations comply with FEC disclosure requirements.
What appears to have happened after the changes is that Christoper Ward assumed the job of treasurer for the RNCC as well as a bunch of leadership PACs (and helped other start new ones). I didn’t look at the NRCC account, but the PACs all seem to follow the same pattern: It records no charges for overhead. Instead, there are only payments to PCS and a range of fund-raising companies. In some cases, those fund-raising companies appear to be fly-by-night organizations, with no other clients and located in dubious sounding businesses. In others, the "fundraiser" in question is McGahn. In McGahn’s case, it appears he was getting some bigger dollars under other line items. Also, these PACs don’t appear to spend much money, and what they spend appears to go to the swing races that RNCC had already targeted.
Also, in this same time period, Ward started or moved the bank accounts for these funds to Wachovia Bank. The article notes that it was a loan from Wachovia that first alerted the NRCC to the forged audit.
NRCC officials contacted the FBI soon after discovering that the former employee, Christopher J. Ward, had submitted what they believe to be a fake internal audit to Wachovia as part of a loan application by the committee.
But here’s the interesting thing about those accounts at Wachovia. In spite of the fact that Ward served as treasurer for a bunch of PACs and other funds using Wachovia, he didn’t have those accounts all at one branch. He had them spread out at branches around DC and (in at least one case) in North Carolina. I suspect such an arrangement would make it easy to move between accounts while still hiding some of that movement. Add in the fact that all the NRCC’s accounts got merged into one, and it sure seems like the set-up would make it relatively easy to launder money through these various accounts–presumably to benefit the people who were managing the books, but almost certainly also to launder soft money into hard, so it could be used directly on campaign expenses.
Mind you, this is all a big guess. But to this non-expert, it does look like the changes made it easier to move money between the various kinds of accounts at RNCC and in PACs to make it available for campaigns.
Ahh, one of the REAL advantages to “privatization” comes to light.
A financial shell game it sounds like but played with really big shells.
Is this whiff of scandal the reason Tom Davis is retiring?
He doesn’t have the guts and fortitude to stand up to this pressure like a real man, say like a Rick Renzi!
It may contribute to it. Since this is all going down in N VA, it’ll be hard for him to hide from it. Tom Reynolds is almost certainly more involved in this. But since the scandal of the page scandal didn’t damage him, I don’t know that this will either. We’re getting stronger candidates to take him on though, and after NY is turning blue.
which is more insolvent, the rnc or the california republitard party ???
good old repuglitard accounting
can we start a pool about which talking-head-moron tells us this is BAD NEWS for the Democrats ???
this is very interesting.
thanks for covering it.
when, in a year or so, this and other money manipulation stories has been coupled with various election manipulation stories,
i suspect we’ll have a much clearer picture of why bush and the right-wing prevailed in national politics over the last decade –
and may continue to do so –
and it won’t have had much at all to do with religion or ideology.
.
Apparently Darrell Issa and Chris Shays will be competing for Davis’s spot on the Waxman committee. That will be some good comedy. I’ll root for Issa.
Seeing as how Shaysie is still in his race, I think he’ll end up with it–he has threatened to take his toys and go home if he doesn’t get the position.
Of course, he’s got to win the election this fall. So Issa shouldn’t give up hope.
What does it say that two of the biggest and least affable assholes have the inside track to the minority co-chair position on the HJC? Since either would be the minority chair opposing the Democratic President, it’s hard to pick a favorite but I might be interested in seeing if ISSA, as much as I find him repugnant, can make a case against an administration as opposed making the case to ignore oversight responsibility and willingly dismiss evidence to the contrary.
Is the NRCC investigation already in the realm of criminal investigation? If so, who’s on it?
Yes, the FBI is investigating, Ward has lawyered up, and all those Congressmen whose leadership PACs were managed by Ward have dropped him.
EW-When I copied the comment #72 at ‘Fitzgerald testifies before HJC’ about Theresa Payton, I omitted the phrase under her name and position, Theresa Payton CIO – Government Organization, the phrase, “Charlotte, North Carolina Area”. Seeing your comments of the location of the banks involved in NRCC, I thought it might be relevant.
Mrs. Panstreppon and I spent some time deconstructing Arceneaux and Ward in a past EW thread on the subject.
Arceneaux is a longtime GOP operative who’s been involved in a lot of shady things. Research on her could go for miles, so instead let’s consider Ward.
My major takeaways on Ward were that:
– Chris Ward’s “company” CJ Ward & Company LLC is listed as “forfeited” in Maryland State Corporation records since 2002. CJ Ward & Company, however, continued to receive payments, despite being a corporate non-entity. I wonder where he was cashing his checks, or who they were made out to, since CJ Ward & Company does not exist?
– Chris Ward lives in a nice house in a neighborhood in Bethesda, having upgraded from an apartment on Pooks’ Hill Road.
– Chris Ward has a kid at an expensive private primary school in Bethesda.
EW and I also thought there might be some Wachovia connection between the accounts that could bring yesterdays testimony-celebre of White House CIO Theresa Payton. Payton worked for both Wachovia and Bank of America before coming to the WH as CIO. Payton’s husband, Chris, appears to continue to work in Charlotte, NC for Bank of America.
But then I had an aha moment.
Payton’s linkedin profile notes she worked at Bank of America from 2004-2006 as CIO,.
Then I remembered this story:
To which I say two things.
– Is there a connection here, since government data was lost.
– And geez, Theresa Payton’s oversight of BofA sure pegs her as a great potential Bush hire!
Smells like a scandal avalanche looming. So many scandals, so little time and resources.
that’s gotta be bad for the Democrats, right ???
that’s probably the funniest part of this story
while the repuglitards are drowning in the sewage of their own actions, they’re sitting around planning ways to blame the Democrats for their problems
so far, the leading repuglitard explanation for all of the corruption scandals that are about to erupt:
“This Is All Just Revenge For Bill Clinton”
be ready to ask this question:
Why Would The Democrats Need Revenge For Bill Clinton ???
it’s coming down the pike, whether hillary is the nominee or not, so we better start beating it down now
Have we seen any details, like dollar amounts deposited or withdrawn from bank accounts? Was this a way to get around the transaction amount that flagged fed reporting by banks?
Citizen92 — nice work, that. Have to wonder if other folks have been hired for similar credentials; can almost here the interview questions now. “So, have you ever ‘disappeared’ user data? how many users were affected? Millions? You’re hired!”
it’s money laundering
and THERE BETTER BE SOME FUCKING RECORDS !!!
we ain’t talking about some emails here folks
we’re talking about MONEY
if there ain’t no records …
well, we know about that …
and we got laws, to put people in jail, for stuff like that
so you better believe there’s gonna be some records
Message to the repuglitards:
It’s called an AUDIT, It’s a WORD, you can look it up
but then again, the repuglitards are gonna learn what an “AUDIT” is …
bend over and cough …
I recall that Wayne Madsen hypothesized some time ago that the disappearing data tapes followed a pattern that suggested the govt was assembling a master info network for spying of US.
And somewhere sandwiched between that nugget, and twenty five just like it, Madsen probably had a rational and logical one.
I agree; he’s over the horizon, but that’s where the rove types operate. They strategize the spaces where conventional thinking doesn’t normally go.
But every now and then, bmaz, Madsen has been way out ahead of the pack. In a blog post back in September, 2006, I linked to his blog when he asserted that top Bush-Cheney officials were involved in whatever it was they were gagging Sibel Edmonds about. He also asserted that Brewster-Jennings’ cover was blown in the process, back in 2001. I don’t recall seeing anything else about that until it was largely corroborated by Edmonds when she went public at the London Times online last month.
Madsen never provided links to individual posts, and since my September, 2006, post went up most content on his site has gone behind a paywall. Thus the links on my post won’t take you to the original Madsen story.
Oh, he had some good info early on the Mark Foley thing too; but you have to sift carefully…….
Only there’s reason to doubt the corroboration.
That is, in connection with the Libby trial the CIA at least claimed that they had to pull a number people back when Plame’s cover was blown in 2003. Which sure suggests that, at least according to the CIA, the cover was not only still in place, but still being used by people.
The Wachovia of Payton’s Sr.VP resume?
Yeah, but the move only happened after she moved on, I think.
OT, but to the heart of the torture debate
http://www.boston.com/bostongl…..t_soldier/
BSL — thank you so much for that link. I hope that article is read far and wide.
When I asked whether we had details about dollar amounts deposited/withdrawn, I was wondering if the amounts were deliberately structured to avoid Currency Transaction Reporting, required on cash transactions of $10,000 or more.
Could explain all the branches in one city.
Could also conveniently explain the $10,000 transaction limit threshold NRCC set up for sign-offs.
Dollar amount is so coincidental, yes?
The known payments aren’t suspicious–much lower or higher than 10,000, at least that show in FEC records.
Also, raising the 10,000 limit at RNCC theoretically SHOULDN’T make you more vulnerable to money laundering–anything over that would be scurtinized by the bank. It’s the stuff below that–which were already possible–that you’d need to be worried about.
The requirement for currency transaction reports is well-drafted. Banks are supposed to be able to locate a series of transactions in currency in a short period,where the total is greater than $10,000, and are required under other provisions to report suspicious transactions. Rayne may be on to something.
The way I read it — at least in my experience with corporate governance — is that controls would be much more lax for amounts under 10K since a newer, higher level would be the threshold. In the corporate world, if approaching a threshold, a person wanting $$ to spend may get antsy and exercise more caution about the audit trail as they neared the threshold. But if the limit has been moved upward, that lower limit is a free-for-all.
I also don’t think it’s payments we’re watching for per se, as much as cash in/out. Why all the bank branches if they weren’t doing structuring of transactions to evade reporting?
I note DeAnna’s comment at (33) about 3K; that may be an institution by institution limit set internally for Suspicious Activity Reporting, and it could be different at Credit Unions than at a national bank. Wish Stephen Parrish was around to weigh in on whether this is a SarbOx issue or banking issue.
I think that is a pretty common limit, according to some people I interviewed for a case.
to Rayne and the original EW post: In spite of the fact that Ward served as treasurer for a bunch of PACs and other funds using Wachovia, he didn’t have those accounts all at one branch. He had them spread out at branches around DC and (in at least one case) in North Carolina. I suspect such an arrangement would make it easy to move between accounts while still hiding some of that movement.
The $10K isn’t a hard limit anymore. Not sure it ever was. Any transactions over 10K are supposed to raise red flags, but opening multiple accounts at different branches is a word-for-word example of suspicious activity that mandates reporting by the bank in question. Doesn’t matter if each account only has $100 in it- if it looks like they’re setting up shell accounts to launder funds, banks have huge incentives to rat people out immediately.
Since every other federal prosecution over the last 5 years has carried at least a whiff of the Turdblossom, I wonder if the suspicious activity was ever reported to the DOJ or Treasury? I wonder if anyone investigated? I wonder how long they’ve known this was going on?
i’ve never been able to figure out where to put the sibel edmonds matter.
but if the govt sees fit to pull the “state secrets” ploy, that guarantees there is something they don’t want made public.
re a turkish-israeli “stealing-nuclear-secrets” alliance:
it does seem to have been the case that israeli planes, flying north along the turkish border without interference and dropping fuel tanks near on in turkish territory, bombed a syrian “nuclear” facility on a hill in the middle of a desert.
the secrets “they” are trying to steal certainly wouldn’t be about how to build a bomb. maybe more like who has them and where are they.
and how doe this fit, if at all, with the matter of lawrence franklin, the dod, and the american israeli pac.
emptywheel #29: raising the 10,000 limit at RNCC theoretically SHOULDN’T make you more vulnerable to money laundering–anything over that would be scurtinized by the bank. It’s the stuff below that–which were already possible–that you’d need to be worried about.
Maybe I misunderstood Rayne’s post, but it seemed to me that’s what she was saying: they’d carefully set the limit at the point that banks would already be scrutinizing, avoiding having to review smaller amounts that would force them to pick up what was going on.
I’ve been following this story since it first appeared, and much as I loathe the Politico, is a genuine scoop of theirs. It’s a story for which you need a lot of Republican sources, and heaven knows they’ve got ‘em. One reason for my interest, aside from schadenfreude, is that my Congressman is one of those who had Ward as his treasurer and then dropped him.
The FBI investigation was triggered by the NRCC realization that Ward had made a false report to the FEC. Until the forensic audit is finished, which is predicted to be another couple of weeks, there won’t be any idea of how much money was embezzled by Ward and others.
If there’s a lot gone missing, the outcry will be huge, because a good bit of that money is raised by the members themselves. They’re sitting on their hands in this cycle, something that would be natural in the current bleak environment but also has to be made worse by this debacle.
I’m missing how the BofA records loss could be connected to this (other than being proof of crap oversight capacity by Payson); weren’t all the accounts at Wachovia banks?
Even though the Bank Secrecy Act requires investigation and reporting at the $10,000, most banks start at a much lower threshold. The Credit Union I belong to investigates anything over $3000.
I am reminded of a training program I attended for grassroots organizers. One segment in particular provided an epiphany for me: a PAC only requires 2 people to form.
Can’t even remember whether this was a federal or state regulated PAC; I only remember my sense of wonderment at the limitlessness this fact offered.
Is this why there are so many bank branches, that it only looked like these were separate PAC’s that were independent instead of a group of PAC’s acting in concert to subvert PAC regulations?
This bit about Shadegg’s campaign finances, for example, could be one of the reasons for all the banks.
Food for thought — guess it still comes down to looking through the transactions.
So, the NRCC executive was just instituting efficient operating systems for its money and was then victimized by a swindling embezzler who took advantage of the recently overhauled rules over the clearing of expenditures and the already-instituted structure of bank accounts, or the structure that embezzler Ward put into place while no one was looking or cuddanoed, or whatever.
I admit to not being as much for detail as [ahem] some, but do I have that correctly?
Minor footnote:: Susan Arceneaux through Political Compliance Services, handled the finances for Swift Boat Vets (SBV). She also handles the books for the Admiral Roy F. Hoffmann Foundation. Roy Hoffmann is a SBV co-founder.
On 2/8/06, SBV contributed $100k to the Hoffmann Foundation, according to the SBV 3/31/06 8872 (p. 3).
But the Hoffmann Foundation did not report the SBV $100k contribution on its 2006 990 (p. 15).
Where did the SBV $100k contribution go?
In response to an accusation that the Swift Boat Vets $100k contribution went into Roy Hoffmann’s pocket, a right wing blogger at the Democracy Project, Bruce Kesler, posted a purported email response from the Swift Boat Vets treasurer on 7/17/06:
“Despite great personal expense Admiral Hoffmann only received just over $1,000 in travel reimbursements in the nearly two years of SBVFT existence.
SBVFT made two donations to the Admiral Roy F. Hoffmann Foundation. A $10,000 donation was made, as was a $100,000 donation, which was later reimbursed back to SBVFT by the Foundation. In the interim the Foundation used the money for payments to soldiers and Marines who had suffered grievous wounds during the fighting in Iraq and Afghanistan. To think that those funds were used by any individuals is a despicable distortion slandering honorable men.”
The $10k Swift Boat Vets contribution was indeed reported by the Admiral Roy F. Hoffmann Foundation in its 2005 990 (see p. 17).
But as I pointed out previously, the Swift Boat Vets $100k was not recorded in the foundation’s 2006 990.
I checked subsequent Swift Boat Vets IRS filings and SBV did not record a refund of $100k from the foundation.