Newt Gingrich’s presidential campaign has received a second warning from the Federal Election Commission (FEC) for widespread financial irregularities, saying the campaign must disclose why nearly $1 million was paid to the candidate, staff and a small group of fundraising consultants for questionable reimbursements.
But hours after the FEC letter on its 2011 finances became public, the campaign filed a report for a newer time period, January, that indicated that the problems have become far worse.
The campaign transferred Mr. Gingrich $88,000 last month for unspecified “travel” expenses, a pace far higher than he paid himself over the course of 2011, a federal report filed Monday showed. It was part of $220,000 in mystery money that month that went to people close to Mr. Gingrich on top of their salaries, raising the issue of potential self-dealing.
The FEC warning letter was issued the day The Washington Times documented the suspect reimbursements.
Gingrich spokesman R.C. Hammond had told The Times that the payments were a result of Mr. Gingrich footing bills early in the campaign and getting reimbursed because no bank would give the campaign a credit card. He had said the campaign was finally able to obtain a credit card late last year, so there would be no reason for the pattern to continue in 2012.
The January payments came in two checks over four days at the end of the month. He would not explain the discrepancy this week.
The FEC’s objections are not to the idea of a candidate and staff fronting costs and getting reimbursed, but because the technique has caused a huge segment of the campaign’s expenditures to become a black box. Rule books say every restaurant, vendor, hotel or other company that receives more than $200 in donated funds must be disclosed, even if a billing conduit is used.
A separate disclosure Monday showed that Becky Burkett, a former top official of a nonprofit Mr. Gingrich headed who now runs a pro-Gingrich super PAC called Winning Our Future, paid herself $220,000 in donated money last month — making more in 20 days than any other super PAC official has made in total since the groups exploded onto the scene, a review by The Times showed.
Super PAC spokesman Rick Tyler said the payments compensated her for November, December and part of January. The fund brought in its first donation Dec. 7. Although that rate puts the Gingrich confidante on pace for an annual salary in the millions, Mr. Tyler noted that political work isn’t assured.
“In this business, we all could be out of a job next — you just don’t know,” he said. “People make more knowing that this could be a short-term contract.”
Among several other staffers, Gregg Phillips also received $90,000 in January.
Administrative responsibilities for super PAC finances are far simpler than those for campaign committees because there are only a few major checks to keep track of rather than thousands of small ones, and many are from established allies. Winning Our Future has about 100 donors.
The donations they do bring in, of course, are more sensitive. Mr. Tyler indicated that the super PAC officials receive commission for money raised.
Ms. Burkett received $100,000 for fundraising services Jan. 23, the day before longtime Gingrich supporter Sheldon Adelson, whose family has provided nearly all the PAC’s money, made out a $5 million check.
Problems extend to nonprofit
Mr. Gingrich’s presidential campaign operations are nearly identical to those of the nonprofit he left to pursue the bid, American Solutions, which Ms. Burkett, who lives in small-town Georgia, received $320,000 over 18 months for helping run.
The accounting practices that are especially fast and loose for a presidential campaign began with the older group, which raised $50 million between 2007 and 2010, but spent most of it on fundraising expenses. It spent $7 million on payments to travel-specific companies, including $3.2 million for a private jet, in addition to reimbursing staffers $1 million for unspecified travel expenses.
It paid $6 million in salary to about 30 staffers, the core crew of which is now on the campaign or super PAC.
The nonprofit’s finances also showed that the favored Gingrich explanation for payments can mean just about anything: Disbursements described simply as “travel” include $100,000 for a speaker’s fee and $650 at a Washington, D.C., bar.
Not afraid of the FEC
While the advent of super PACs has lifted contribution limits and outside groups have repeatedly pushed the boundaries of the new system, the campaign’s effort to hide money stands out because the argument for relaxed campaign finance laws was always that full disclosure, not dollar caps, was the antidote to corruption.
Despite overseeing unprecedented amounts of money, the FEC’s ability to enforce any of its rules is weak, and the political will to do so is at a low — both of which the Gingrich campaign’s boldness seems predicated on.
The commission is made up of three Republicans and three Democrats, and many of its votes have resulted in ties. Additionally, the three Republicans do not seem to be interested in taking action against candidates from either party, Mr. Ryan said.
“The Gingrich campaign may be banking on the three Republican commissioners being just as hostile to campaign finance disclosure laws as the Gingrich campaign apparently is,” he said.
The FEC staff whose letters have been ignored would need four of the commissioners to vote to approve an investigation, then to accept its findings and, if necessary, a settlement that would resolve the issue in exchange for a fine and the required information. Though very rare in the past, a campaign could refuse and the dispute would go to court, where it could argue that FEC rules, as built up over decades of precedent and guidance, have all along been an incorrect interpretation of federal statute.
Why Mr. Gingrich would desire the distraction of taking a stand to reshape campaign finance law is a mystery — though the willingness to take the risk to hide the source of the money also gives the appearance that the truth could be unsavory.
“In past elections, the last thing a candidate would want to be in the news for is apparent violation of campaign finance laws,” Mr. Ryan said.
Mr. Gingrich, a student of history, may be predicting that noncompliance will simply be ignored.
“The FEC has rendered itself a nonentity,” Mr. Ryan said. “They’re the cops in the doughnut shop.”