“They’re Not Businesspeople … They Won’t Spend a Dime on Management”

So says Republican campaign finance lawyer Cleta Mitchell of the NRCC. It’s her excuse for why the NRCC didn’t take very basic measures to ensure that Christopher Ward didn’t steal from the campaign committees he worked with.

Whatever the excuse, the NRCC is now complaining, again, that they’re victims and therefore it’s very mean that the FEC will fine them for overstating their cash on hand because they had a corrupt treasurer.

The FEC remains paralyzed for the moment, the result of a lingering confirmation fight between the White House and Senate Democrats. But after acknowledging that there was a $740,000 difference between the fundraising numbers the committee reported and its actual cash on hand — a partial result of the alleged embezzlement by Christopher J. Ward — NRCC Chairman Tom Cole (R-Okla.) and a top outside lawyer are already angling for lenient treatment from the commission.

“Our working relationship with the FEC has been good,” Cole said last week. “We were the victims here.”

But the Politico article lays out all the things the NRCC did not do to prevent Ward from embezzling the money.

But a series of FEC guidelines issued last spring suggest the NRCC’s after-the-fact cooperation might not be enough. Under those guidelines, NRCC officials also must demonstrate that they did what they could to prevent the acts of malfeasance they allege.

The FEC established these “safe harbor” policy guidelines in April 2007 amid a spate of embezzlement cases. Commissioners wanted to help these victims of internal malfeasance avoid paying additional fines — provided that the victims took reasonable steps to protect themselves in the first place.

The safe harbor recommendations call for campaign committees to establish certain basic internal auditing controls to prevent misappropriations by an employee. These include: two signatures on any check in excess of $1,000, a sign-off by two people on all wire transfers and separate individuals handling the intake of and accounting for campaign funds.

The guidelines also call on committees to act quickly in disclosing their internal fundraising information to the correct federal authorities.

The NRCC, of course, deliberately unified all its accounts into one (incidentally, so did the DCCC, also apparently in response to BCRA). And the NRCC also gave Ward the ability to sign off on any checks–including those over $10,000.

Read more

NRCC Catalogs the Damage

The NRCC says that the FBI investigation has reached a point where it can reveal how much, it claims, it was bilked out of by Christopher Ward. Before I get into the details, though, what do you suppose it means that the investigation now allows them to go public about the damage? I ask because the NRCC makes clear that the FBI has never entered the premises of the NRCC. Curious.

We refrained from making extensive public comments until now so as not to compromise the investigation being conducted by the FBI. We understand that the FBI’s investigation has now progressed to a point where such public comment would no longer interfere with the investigation. Accordingly, the NRCC is providing this update on the status of its own internal investigation.


Contrary to media reports, the FBI has not been to the NRCC office during the course of this investigation nor have they operated out of the NRCC offices.

First, it appears that the NRCC has not done a real audit of its finances since BCRA went into effect.

It appears that after becoming treasurer in 2003, Ward submitted to the NRCC’s bank and to NRCC leadership bogus audit reports for 2002, 2003, 2004 and 2005. An additional bogus audit was submitted to the NRCC’s bank for 2006.

So remarkably, just as campaign finance put new restrictions on soft money contributions, the NRCC stopped auditing what happened with its money.

Also note how squeamish the NRCC is about naming their bank, Wachovia. Odd, not least because the damn thing is listed everywhere on FEC reports.

Read more

Gold Standard Gate, an Update

Golly, I just remembered that people besides Eliot Spitzer are facing political troubles–the WaPo has a story that slightly advances the NRCC story, including the CYA that the Republicans considered Christopher Ward, the treasurer at the center of the scandal, the "gold standard" in campaign finance compliance.

In the tiny world of people who keep the books for Washington’s multitude of political committees, Christopher J. Ward was considered the Republican "gold standard," in the words of a former co-worker — one of the few people with so much expertise in election law that everyone wanted Ward’s services.

From a legal standpoint, I’m most interested in the detail that Ward’s submission of one of the audits he forged to Wachovia caused the NRCC to be concerned.

Officials told The Post that the NRCC’s problems may be more extensive. Republican lawmakers and former committee staff members now allege that Ward fabricated audits and other financial documents for 2003 to 2006, some of which were turned over to a Wachovia Bank branch in McLean in October 2006, when the NRCC borrowed $8 million in last-minute money for congressional campaigns.

This act would get the NRCC into legal trouble for fraud. Quick quiz: Can you think of any other Republican who acquired a million-dollar loan through fraudulent representations? Given that the "Straight Talk for Lobbyists" is willing to make deliberate misrepresentations to get loans for his campaign, I can see no reason to assume the even more corrupt Republicans weren’t doing the same.

Other than that, the story features the now-requisite efforts on the part of Peter King to paint himself as a victim in this scandal, claiming he got bilked into keeping the PAC open through 2007 after he believed it had closed in 2006.

"We were told he was the guy that handled all the campaign committees, he was the best," said Rep. Peter T. King (N.Y.).

But King said in an interview that he has discovered that Ward paid himself $6,000 in consulting fees from King’s political action committee in 2007 — though King believed that he had shuttered the committee early last year. Upon learning of the NRCC investigation, King said he found that his PAC remained open all of last year. Ward paid himself the fees from King’s PAC, which received just three contributions and dispensed one check in 2007, FEC records show.

Read more

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). Read more

The NRCC Meltdown: An Introduction

I haven’t commented on the FBI investigation of the NRCC treasurer, Christopher Ward yet because, well, because this damn FISA bill is taking all my time.

Top House Republicans were told in recent days that a former employee of their campaign committee may have forged an official audit during the contentious 2006 election cycle and that they should brace for the possibility that an unfolding investigation could uncover financial improprieties stretching back several years, according to GOP sources briefed on the members-only discussions.

But let me make some initial points and then illustrate and then I’ll do a follow-up post on just one example of what I suspect the FBI is investigating.

  • Per the Politico, Christopher Ward has been doing the NRCC’s books since 1993–that is, since the "Contract with America" cycle and since the Republicans started marching in neocon lockstep
  • Per RawStory, Ward also worked for a finance firm that has done the books for a bunch of other GOP entities, including the Swift Boaters
  • Per Politico, a number of Congressmen for whom Ward served as treasurer have already announced their retirement

It just so happens that I just finished Allen Raymond’s How to Rig an Election in preparation of the FDL book salon for tomorrow. So I read this passage–in which Raymond described his brainstorming for a new online political consulting firm–just as this scandal was breaking.

If all it took to get venture capital for a political dot-com was a shitty idea, hell, I could easily exceed the standard.

The first one I had was to develop an online currency exchange where the Republican national campaign committees, such as the RNC, and its affiliated state parties, could log in and trade hard money for soft and vice versa. When I ran the idea by Curt Anderson, he said, "What are you, fucking crazy? This is the stuff that’s suppose to happen in the dark of night."

"Why shouldn’t it be transparent?" I reasoned. "It all gets filed in FEC reports anyway."

"Allen, no one’s going to buy it." He was right. THe currency exchange that happened almost daily between the national Republican organizations and the state parties was the equivalent of Scarface turning drug cash into Treasury bonds. No one would want to be on record doing it.

Read more