PRESS RELEASE from New Hampshire Democratic Party

For immediate release:
April 29, 2011
 
Contact: Holly Shulman
 
New Hampshire Democratic Party Files Complaint with the Federal Election Commission Against Mitt Romney's Presidential Campaign Committee’s Enron-Style Accounting Scheme
 
Credible Evidence Suggests Laws May Have Been Broken By Romney Using "Soft Money" Corporate, Unlimited Donations to Fund Presidential Campaign

Concord, N.H. – Today, the New Hampshire Democratic Party filed a complaint with the Federal Election Commission against Mitt Romney's presidential campaign committee, raising questions about his campaign’s circumvention of campaign finance laws.
 
The complaint details how Mitt Romney's presidential campaign may be funneling "soft money" (unlimited and corporate contributions) through his state political action committees (PACs) to his federal presidential campaign, circumventing federal campaign contribution limits. Evidence outlined in the complaint suggests that laws may have been broken.


“Romney’s funneling of campaign contributions from his array of state political action committees to fund his presidential campaign reeks of an Enron-style accounting scheme,” said Holly Shulman, communications director of the New Hampshire Democratic Party. “Mitt Romney just wants to be President – plain and simple - and he’ll take any position, say anything or do anything to get there."
 
The complaint outlines three ways that Romney may have broken the law and urges further investigation:

• Under the McCain-Feingold legislation passed by Congress in 2002, any entity "established, financed, maintained, or controlled" by a federal candidate is prohibited from raising or spending "soft money." Mr. Romney clearly "established" the state PACs.  Therefore, regardless of whether he still "finances, maintains, or controls" the PACs, they became subject to the "soft money" restrictions as soon as Mr. Romney became a presidential candidate – which occurred no later than April 11, 2011.

• FEC rules prohibit multicandidate PACs from providing more than $5000 in goods and services per election to the federal candidate it is associated with, and these rules also apply to certain expenditures made before the presidential candidate declares his candidacy.  For example, certain polling, staffing, and other administrative expenses made by a multicandidate PAC before the candidate declares his candidacy must be treated as in-kind contributions or reimbursed by the campaign within 30 days following the declaration of candidacy. Evidence suggests that Romney may have used funds from his federal and state PACs to pay for expenses that should have been paid for by his presidential campaign.

• Federal law permits presidential candidates to accept up to $5000 in individual contributions with $2,500 designated for the primary election and $2,500 designated for the general election. Therefore, if donors to Mr. Romney's State PACs intended for their contributions to be used to help Mr. Romney's presidential campaign, as his donors have said in media reports, these contributions would be subject to federal limits.

           
Read the complaint by clicking here and Exhibit A, Exhibit B, Exhibit C and Exhibit D.

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Romney’s Extensive Network Of State And Federal PACs Have Allowed Him To Essentially Circumvent Campaign Finance Laws By Helping Him Underwrite Expenses And Dole Out Money To Local Candidates. “The maximum donation a person can give a presidential candidate under federal law is $2,400. Yet Edward Conard, a Mitt Romney supporter, has already donated $90,000 to the former Massachusetts governor’s campaign apparatus. How is that legal? Romney’s end run around the federal campaign finance rules is rooted in his status: He is a presidential aspirant, a hopeful, a wannabe. In other words, he is not yet an official candidate. And that’s what allows him and his campaign-in-waiting to straddle the boundaries of federal law. It’s a loophole whose measure was tested and mastered by Romney in 2006, when he first established five state political action committees to underwrite the expenses of his federal headquarters and dole out money to local candidates in early primary states who could help his presidential quest.” [Politico, 8/18/10]

The Boston Globe: Romney Has “Become A Master Of A Controversial But Legal Fund-Raising Technique That Relies On A Network Of Loosely Regulated State Political Action Committees To Collect Those Funds.”“Since his defeat in the 2008 GOP presidential primary, a few political friends have given generously to Romney’s political operation, providing him a financial and organizational edge as the 2012 campaign gets underway. But donors’ generosity is not the only reason Romney’s bottom line is strong. The former Massachusetts governor has become a master of a controversial but legal fund-raising technique that relies on a network of loosely regulated state political action committees to collect those funds.” [Boston Globe, 4/15/11]

Each State Operates Under Different Contribution Rules Which Mean Romney Could Collect Corporate Checks In Alabama, Unlimited Donations From Individual Backers In Iowa And Regulated Donations In South Carolina And New Hampshire. “The state committees are located mostly in early primary states — Iowa, New Hampshire, South Carolina, Michigan and Alabama — and each operates under different contribution rules established by local statute. That means Romney can collect corporate checks in Alabama, unlimited donations from individual backers in Iowa and regulated donations in South Carolina and New Hampshire.” [Politico, 8/18/10]

• Paul S. Ryan Of The Campaign Legal Center: Romney’s Fundraising Is “A Charade And Disingenuous.” “Advocates for tighter restrictions on the flow of money in politics say Romney is getting around rules intended to restrict the amount candidates raise while they are testing the waters for a presidential run. ‘This whole situation in my view becomes a charade and disingenuous,’ said Paul S. Ryan, associate legal counsel at the nonpartisan D.C.-based watchdog Campaign Legal Center. ‘Is a little honesty too much to ask?’” [Boston Globe, 4/15/11]

• David Donnelly Of The Public Campaign Action Fund: Romney’s Fundraising Scheme Is “A Big Racket.” “David Donnelly, national campaigns director at Public Campaign Action Fund, concurred, saying Romney is ‘clearly violating the intent and the spirit of the law.’ ‘It’s a big racket,’ Donnelly said. ‘There’s not even a fig leaf.’” [Boston Globe, 4/15/11]

FOUR OF THE STATE PACS SHARED AN ADDRESS AND HAD ACCOUNTS AT THE SAME BANK OF AMERICA BRANCH

• Four Of Romney’s “State Political Committees…Shared An Address In Lexington, Mass.” And “Contributions To Them Flowed Through Accounts At The Same Bank Of America Branch In Washington.” “Four of Romney’s five state political committees — in Alabama, New Hampshire, Iowa, South Carolina, and Michigan — shared an address in Lexington, Mass. Contributions to them flowed through accounts at the same Bank of America branch in Washington, a block from the White House. Most then went to another account at the same bank — the one for Romney’s federal committee — to pay overhead.” [Boston Globe, 4/15/11]

DONORS WERE ABLE TO WRITE CHECKS TO EACH STATE AND FEDERAL PAC…
Politico: The Arrangement Of State PACs With Various Contribution Rules Provides Romney’s Most Loyal And Generous Backers With Multiple Opportunities To Contribute To His Romney’s Presidential Aspirations.“The state committees are located mostly in early primary states — Iowa, New Hampshire, South Carolina, Michigan and Alabama — and each operates under different contribution rules established by local statute. That means Romney can collect corporate checks in Alabama, unlimited donations from individual backers in Iowa and regulated donations in South Carolina and New Hampshire. The arrangement provides Romney’s most loyal and generous backers with multiple opportunities to grease the gears of his political machine.” [Politico, 8/18/10]

Politico: Romney’s Free And Strong PAC Raised $486,700 From A Mere 24 Individual Donors. “According to a POLITICO analysis of information from the federal Free and Strong America PAC, the combined $486,700 raised by the state committees from Jan. 1, 2009, to June 30, 2010, came from just 24 individuals.” [Politico, 8/18/10]

·         Romney Received $215,000 In Contributions From J.W. Marriott Jr.’s Wife And Brother. “Consider the gifts to Romney from Donna G. Marriott — the wife of Marriott chairman J.W. Marriott Jr. — and J.W.’s brother, Richard E. They wrote checks totaling $215,000 to Romney’s state political committees, according to public records reviewed by the Globe.” [Boston Globe, 4/15/11]
·         Marc Leder, A Florida Investor, Contributed $50,000 To Romney’s Political Future In A Single Day By Cutting Six Checks To Romney’s Network Of State And Federal PACs. “Take the case of Marc Leder, a Florida investor, who in a single day — March 2 — banked $50,000 on Romney’s political future. He did that by cutting six checks to Romney’s far-flung network: $3,500 for the South Carolina committee, $10,500 for the Alabama, Iowa and Michigan PACs, $10,000 for the New Hampshire operation and $5,000 to the federal headquarters in Boston.” [Politico, 8/18/10]
·         A Former Bain Capital Executive Contributed $67,500 In A Single Day To Romney’s Political Operation By Cutting Big Checks For Romney’s South Carolina, Alabama, Iowa And New Hampshire PACs. “Conard, a retired executive from Romney’s investment house, Bain Capital, was even more generous on May 20 when he invested $67,500 in the Romney political operation. He gave $3,500 to the South Carolina committee, $27,000 to both the Alabama and Iowa branches and $10,000 to the New Hampshire PAC.” [Politico, 8/18/10]
·         Edward Conrad Donated $90,000 To Campaign Apparatus. “The maximum donation a person can give a presidential candidate under federal law is $2,400. Yet Edward Conard, a Mitt Romney supporter, has already donated $90,000 to the former Massachusetts governor’s campaign apparatus.” [Politico, 8/18/10]
·         Co-Founder Sun Capital Partners Inc., A Private Equity Firm, Gave $50,000 To Romney’s State And Federal Committees On March 2nd.“Leder’s business partner, Rodger Krouse, co-founder of the private equity firm Sun Capital Partners Inc., gave $50,000 to the state and federal committees on March 2.” [Politico, 8/18/10]
·         A Palm Beach Venture Capitalist Contributed Six Checks To Romney’s Network Of PACs That Totaled $45,000. “Palm Beach venture capitalist Howard Cox replenished the state accounts May 6 by issuing six checks totaling $45,000 to the Romney PACs.” [Politico, 8/18/10]

… WHICH ROMNEY FUNNELED TO A FEDERAL SOFT MONEY POT

Romney Set Up An “Unusual” Architecture Of State And Federal PACs That “Essentially Gives Him A Flexible Pot Of 'Soft Money.” “The use of leadership PACs by potential presidential candidates is not new, but the elaborate architecture of state and federal PACs Mr. Romney has set up is unusual, campaign finance lawyers said. Mr. Romney leaned on a similar setup before his last presidential run as well. Having the state PACs subsidize a significant part of his federal PAC’s expenses enables Mr. Romney to maintain a larger political operation in Boston than he could if he were restricted to the capped donations his federal committee can accept. The offloading of expenses on the state PACs also allows Mr. Romney’s federal PAC to be more generous with the money it distributes to federal candidates, who might be counted on for favors down the road. Mr. Romney’s committees in the three states that do not restrict donations to these kinds of organizations, essentially gives him a flexible pot of “soft money” — or unregulated contributions — before he formally decides to run and becomes subject to strict federal limits on political donations.” [New York Times, 11/20/10]

The Vast Majority Of The Money Raised From Romney’s Alabama PAC “Has Been Directed Back To The Boston Headquarters Of Free And Strong America” To Pay For His Political Staff. “Yet it has donated $21,500 — less than 5 percent of what it has raised — to state and local candidates in Alabama, for which these state PACs are ostensibly intended. (The PAC also contributed $3,500 to Nikki Haley’s successful campaign for governor in South Carolina.) Instead, a vast majority of the just over $300,000 Mr. Romney’s Alabama PAC has reported spending this year has been directed back to the Boston headquarters of Free and Strong America, paying for, among other expenses, a significant part of the salaries of Mr. Romney’s political staff, who will almost certainly form the core of his presidential campaign if he decides to run.” [New York Times, 11/20/10]

“The State PACs Have Funneled More Than $600,000 Into Mr. Romney’s Federal PAC.”  “In all, the state PACs have funneled more than $600,000 into Mr. Romney’s federal PAC, paying for half of the organization’s legal fees this year, which totaled $84,000; they have paid about 50 percent of the PAC’s office supply budget, which came to $4,000; they even picked up the tab on half of the $560 the PAC spent for paper shredding.” [New York Times, 11/20/10]

STATE MONEY WAS USED TO PAY FOR NATIONAL VENDORS

Politico: The Vast Majority Of The Money Raised By Romney’s Five State Committees Is Spent To Support His Boston-Based Operation Of The Federal PAC. “According to disclosure reports and data provided by Fehrnstrom, Romney already has contributed more than $500,000 to candidates, party committees and conservative caucuses. The federal Free and Strong America PAC has made more than $418,000 in donations, while the state PACs have contributed a combined total of $111,050. But the vast majority of the money raised by Romney’s five state committees, which exceeds $480,000, is actually spent to support the Boston-based operation of the federal PAC — and home of Romney’s campaign apparatus. Each state committee is regularly docked to pay a portion of Romney’s paid staff costs in Boston and for various presidential campaign consultants who remain on retainer. The local committees are even charged a portion of the headquarters’ phone bills and shredding service.” [Politico, 8/18/10]

Romney Has Used His State PACs To Pay For Consulting Firms Since 2008.“In the Field Consulting, a political consulting firm established by a former Romney campaign adviser, has been paid about $112,480 since 2008 with portions of the payments rolling through the Iowa, New Hampshire, Alabama, Michigan and South Carolina accounts, according to data provided by Romney’s staff. Another key consultant is SJZ LLC, a fundraising firm founded by Spencer J. Zwick, who is one of Romney closest and longest-serving advisers. In the past two years, SJZ has been paid nearly a million dollars for its work and that of its consultants.” [Politico, 8/18/10]
Politico: No Money Raised By Romney’s State PACs Has Been Spent With Local Vendors Or Strategists And His State PACs Don’t List An Actual Address Or Show Rent Payments. “POLITICO’s analysis showed that no money has been spent with local vendors or strategists in any of the states where the committees are registered. There aren’t even rent payments since the address listed for each of the state committees is the Lexington, Mass., offices of the federal PAC.” [Politico, 8/18/10]
 
Politico: Romney Re-Named His Commonwealth PAC After The 2008 Presidential Election In Order To Keep His Presence High And Key Campaign Staff On The Payroll. “To keep his presence high and key campaign staff on the payroll after the 2008 presidential campaign, Romney re-named his Commonwealth PAC, a federal political action committee, and its five, corresponding state-based committees the Free and Strong America PACs.” [Politico, 8/18/10]

SINGLE EXPENSES WERE SPLIT ACROSS STATE PARTIES…

Single Expenses For Romney’s Operation Have Been Split Across State Parties, “Even Individual Starbucks Purchases By Members Of His Political Staff Have Been Divided Up To The Penny And Apportioned Across The Array Of Romney Committees.” “Parts of the overhead costs incurred by Romney’s national political operation were reported as individual state committee expenses through complex accounting on campaign finance reports. Even individual Starbucks purchases by members of his political staff have been divided up to the penny and apportioned across the array of Romney committees.” [Boston Globe, 4/15/11]

Romney’s State PACs Funneled More Than $600,000 Into Romney’s Federal PAC, Paying For Half Of The Organization’s Legal Fees, About Half Of The Office Supply Budget And Half The Tab Of The Spend For Paper Shredding. “In all, the state PACs have funneled more than $600,000 into Mr. Romney’s federal PAC, paying for half of the organization’s legal fees this year, which totaled $84,000; they have paid about 50 percent of the PAC’s office supply budget, which came to $4,000; they even picked up the tab on half of the $560 the PAC spent for paper shredding.” [New York Times, 11/20/10]
 
…AS WERE SALARIES
 
“Roughly Half The Salary Of Eric Fehrnstrom… It Paid From By The Federal PAC While The Rest Is Divided Up By The State-Based PACs Mr. Romney Has Set Up.” “In his filings with the election commission, Mr. Romney is essentially contending that his leadership PAC’s work is divided evenly between federal and non-federal election activities and that the financing of administrative expenses is accordingly divided between the state and federal PACs. As a result, for example, roughly half the salary of Eric Fehrnstrom, a senior adviser to Mr. Romney who was his traveling press secretary in his 2008 presidential run, is paid for by the federal PAC, while the rest is divided up by the state-based PACs Mr. Romney has set up in Alabama, Iowa, Michigan, New Hampshire and South Carolina.” [New York Times, 11/20/10]
 
The State PACs And Federal PAC Each Paid About 50 Percent Of The Salaries Of Executive Director Matt Rhoades And Campaign Manager Beth Myers. “The Alabama entity has covered a little less than 20 percent of Mr. Fehrnstrom’s salary, which has totaled about $75,000, according to the most recent campaign finance filings available. It has provided a similar percentage of the roughly $50,000 that the PACs have reported paying this year to Matt Rhoades, the group’s executive director who was the 2008 Romney campaign’s research director, and paid Beth Myers, formerly Mr. Romney’s campaign manager, about 13 percent of the more than $75,000 in consulting fees she has taken in this year. Mr. Romney’s federal PAC has covered about 50 percent of their salaries, with the state PACs taking on the rest.” [New York Times, 11/20/10]

STATS

Romney’s State PACs Reported Raising About $1.5 Million In 2010 While The Federal PAC Collected $4.2 Million. “Together, the state PACs have reported raising about $1.5 million in contributions this year, while the federal PAC has collected $4.2 million.” [New York Times, 11/20/10]

Romney Has 5 State PACs Including One In Alabama That Accepts Unlimited Amounts Of Contributions From Individuals And Corporations.“The fact that Mitt Romney, the former Massachusetts governor who is weighing a run for president in 2012, has an active political action committee in Alabama might seem puzzling. Mitt Romney, right, has committees in five states, including Iowa, where he campaigned with Terry Branstad, now governor-elect.  It is, after all, not a critical early-voting state for the Republican nomination, where these kinds of leadership PACs are often set up by potential presidential candidates.  Upon closer inspection, though, Mr. Romney’s interest in Alabama snaps into focus. The state has among the most permissive campaign finance rules in the nation, allowing contributions of unlimited size from individuals and corporations.” [New York Times, 11/20/10]

Romney Raised Over $440,000 From His Alabama PAC In 2010. “As a result, the Alabama affiliate of Mr. Romney’s federal PAC, Free and Strong America, has raised more than $440,000 this year, with many of the contributions amounting to tens of thousands of dollars each.” [New York Times, 11/20/10]
 
Romney’s Alabama PAC Donated Less Than 5 Percent Of What It Raised To State And Local Candidates In Alabama. “As a result, the Alabama affiliate of Mr. Romney’s federal PAC, Free and Strong America, has raised more than $440,000 this year, with many of the contributions amounting to tens of thousands of dollars each. Yet it has donated $21,500 — less than 5 percent of what it has raised — to state and local candidates in Alabama, for which these state PACs are ostensibly intended. (The PAC also contributed $3,500 to Nikki Haley’s successful campaign for governor in South Carolina.)” [New York Times, 11/20/10]

CONTRIBUTIONS

Romney’s Five State PACs And Federal Committee Allowed Him To Donate $42,000 To Nikki Haley’s Campaign In South Carolina Where The State Law Limits PAC Donations To A Candidate To $3,500 Per Election.“In South Carolina, for instance, state law limits donations to candidates from PACs to $3,500 per election, which means a committee can give a local candidate a combined total of $7,000 for a primary and general campaign. Romney’s team blew the roof off those caps when the five state committees and the federal headquarters gave maximum donations to GOP gubernatorial candidate Nikki Haley for a grand sum of $42,000, compliments of the Romney Empire.” [Politico, 8/18/10]