Virginia Gov. McAuliffe rerouted funds for inaugural

Legislature banned uses for politics

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The Virginia legislature years ago banned governors from donating excess inauguration funds to political causes, but that hasn’t stopped Gov. Terry McAuliffe from finding a way to route $211,000 from his inaugural fund back to his election campaign and the Virginia Democratic Party, disclosure records show.

Mr. McAuliffe’s aides say the two $78,000 checks his inaugural committee sent to his campaign committee along with a $55,000 check to the state Democratic Party were expenditures for the rental of email lists. But campaign finance analysts told The Washington Times that the costs of the email rentals appeared to be exorbitant, and critics suggest the transactions look like an end run around the state prohibition.


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“It’s Terry McAuliffe,” said Bradley A. Smith, a Federal Election Commission member during the George W. Bush administration. “It’s probably legal, but it may make you raise an eyebrow.”

Mr. Smith said such transactions sometimes occur to abolish a committee’s debt or to get a campaign some assets.

“Here, you have the campaign maybe trying to retire debt or whatever, so they may actually be paying too much for the list,” he said. “My gut is that if somebody really wanted to prove this, it might be worth snooping around a little bit more.”

Mr. McAuliffe’s campaign defended the transactions in November and December as legitimate expenditures to invite people to Mr. McAuliffe’s inauguration in Richmond. The payments were listed in the most recent report his inaugural fundraising committee filed.

Republicans, who tried unsuccessfully to defeat Mr. McAuliffe in the November election by focusing on ethics issues related to his earlier career as a major political fundraiser for Bill Clinton and Hillary Rodham Clinton, jumped on the revelations.

“Color me surprised that Terry McAuliffe is involved with what looks like a highly questionable decision involving money and politics,” said Garren Shipley, a spokesman for the Republican Party of Virginia. “Whether it’s renting out the Lincoln Bedroom, cashing in on Global Crossing as the company tanked, or investing in a program state officials worried was a visa-for-sale scheme, Terry McAuliffe continues to give Virginians every reason to be skeptical of his actions.”


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The question of how leftover inaugural funds are spent became a big issue in Virginia in 2006 after Gov. Tim Kaine, a Democrat, used $400,000 of his inaugural funds as seed money to form a political action committee. Mr. Kaine raised nearly $3.2 million for his 2006 inauguration and contributed roughly $80,000 to Democratic candidates out of the inaugural fund. The total included donations made in the period after his election and before he was sworn in.

A Republican-led General Assembly subsequently tightened the laws governing the purposes for which inaugural funds can be spent. Now, excess funds can only be returned to contributors or donated to charity. Former Gov. Bob McDonnell, a Republican and a target of ethics charges for gifts he and his family reportedly received while he was in office, donated more than $100,000 in surplus inaugural funds in 2010 to a handful of charities that included a museum, a charter school and some nonprofit organizations.

A full accounting of Mr. McAuliffe’s inaugural funds is not due until March 15, so it is unclear whether any additional funds were transferred past the reporting period that ended Dec. 31. Committees are required to report contributions of more than $10,000, and a tally of the money he received solely from large donors shows the Democrat having collected at least $1.7 million.

Campaigns and political action committees routinely farm out email lists to interested parties — Mr. McAuliffe in the course of his campaign was able to take advantage of President Obama’s coveted campaign list, run by the Democratic National Committee.

Anthony Corrado, a professor of government at Colby College in Maine, said sharing email lists is common in politics.

“It’s not that atypical. In order to make use of the list, oftentimes a list will be purchased by another entity. Typically, that’s where you would see the common use of a list.”

The real issue becomes the cost of the list, which depends on various factors, he said.

A spokeswoman for the Center for Responsive Politics, a nonprofit group that studies campaign finance and political ethics, agreed that list rentals are common but that Mr. McAuliffe appeared to have paid a lot.

The only examples a researcher with the center could find in 2012 of candidates placing that kind of value on their lists were Mr. Obama, who rented his list to the Democratic National Committee, and Republican Herman Cain. In Mr. Cain’s case, however, the former presidential candidate offered the list as an in-kind donation from his PAC to his campaign committee — meaning no money was exchanged.

The highest price one campaign committee paid another for a list was Obama for America, spending $62,782 on lists from Hillary Clinton for President, Sarah Flocken of the Center for Responsive Politics said in an email.

“I think that number’s high,” political consultant Kurt Luidhart said of the money Mr. McAuliffe paid for the list. “It also strangely doesn’t make sense in the context [of] the situation. If you’re trying to get an email blast out, there are a lot cheaper ways to get that out.”

Mr. Luidhart, who works with lists of national-level Republicans, said it typically costs a set amount every time an email blast is sent — meaning Mr. McAuliffe’s inaugural committee theoretically pegged the value of his campaign committee’s list at $78,000 or thereabouts.

“I would imagine Terry McAuliffe’s list is good [but] he’s running for governor, not president,” Mr. Luidhart said.

By comparison, the campaign lists for 2012 Republican presidential contenders Michele Bachmann and Rick Santorum went for $25,000 — and Mr. Santorum’s had more than 100,000 donors, he said.

“Friend to friend, I might have said, ‘Well, I might charge the actual cost to blast out an email’ — not market rate plus 30 percent,” he said.

© Copyright 2014 The Washington Times, LLC. Click here for reprint permission.

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