New RNC Chairman's Campaign Spending Questioned
http://www.truthout.org/020709E
Henri E. Cauvin, The Washington Post: "Michael S. Steele, the newly
elected chairman of the Republican National Committee, arranged for
his 2006 Senate campaign to pay a defunct company run by his sister
for services that were never performed, his finance chairman from
that
campaign has told federal prosecutors."
Federal agents in recent days contacted Steele's sister, a
spokesman
for Steele said yesterday.
The claim about the payment, one of several allegations by Alan
B.
Fabian, is outlined in a confidential court document. Fabian offered
the information last March as he was seeking leniency for himself
during plea negotiations on unrelated fraud charges. It is unclear
how
extensively his claims have been pursued. Prosecutors gave him no
credit for cooperation when he was sentenced in October.
Steele spokesman Curt Anderson said he did not know what
information the federal agents were seeking, but he dismissed
Fabian's
allegations as patently false. "It's from, what, a convicted felon?
And it has no substantiation in fact," he said.
Fabian's claims emerge as Steele begins his new role at the RNC,
where he oversees the raising and spending of hundreds of millions of
dollars in party money. The former Maryland lieutenant governor has
faced questions about his handling of campaign money in prior
elections and was twice fined for missing filing deadlines.
The recent allegations outlined four specific transactions. In
addition to the payment to Steele's sister, Fabian said that the
candidate used money from his state campaign improperly; that Steele
paid $75,000 from the state campaign to a law firm for work that was
never performed; and that he or an aide transferred more than
$500,000
in campaign cash from one bank to another without authorization.
The bank transfer was made against the explicit wishes of other
Maryland Republicans, who had hoped to use it to support the
campaigns
of state legislators, said aides to Steele and former governor Robert
L. Ehrlich Jr.
The U.S. attorney's office inadvertently sent the confidential
document, a defense sentencing memorandum filed under seal, to The
Washington Post after the newspaper requested the prosecution's
sentencing memorandum.
U.S. Attorney Rod J. Rosenstein declined to comment. Fabian could
not be reached, and his attorney, James Wyda, declined to comment.
According to the filing, Wyda gave prosecutors "documents
supporting [the] allegations." Wyda wrote in the memorandum that the
government declined to credit Fabian for cooperating "presumably
because its investigation is ongoing."
The Post corroborated some details of Fabian's claims through
public records and interviews with former staff workers. Other
details
were disputed by people involved in the transactions.
In one of his allegations, Fabian points to a February 2007
payment by Steele's Senate campaign of more than $37,000 to Brown
Sugar Unlimited, the company run by Steele's sister, Monica Turner.
Campaign finance records list the expense as having been for
"catering/
web services." Turner filed papers to dissolve the company 11 months
before the payment was received.
Turner, a doctor and the former wife of Mike Tyson, declined
yesterday to describe any services she provided to the campaign. "Ah,
it's the 'sabotage Michael Steele' story," she told a reporter before
closing the door of her home in Potomac. "No, I'm not with that
program.... I'm not going to do this."
Anderson, Steele's spokesman, said Turner "did a lot of media
stuff" for the campaign. He later provided a copy of an invoice for
nearly $15,000 for catering services for one event in October 2006
and
for another in July 2007. The invoice was dated December 2006, a
discrepancy Anderson said was a typographical error.
Federal election law permits a candidate's family members to be
paid for work on a campaign. Any compensation must be for actual
services and must be at a fair market rate.
In a separate allegation, Fabian described the bank withdrawal.
After the 2006 election, an aide transferred the funds that had been
raised for Steele's lieutenant governor campaign - more than $600,000
- out of what had been the campaign's bank account.
Fabian characterized the transfer as improper because the aide
lacked signatory authority over the account. Anderson said it was
appropriate because Steele had authorization and the aide was acting
on his behalf.
Either way, the transfer strained relations between Ehrlich and
Steele.
The money had been raised for Steele in concert with Ehrlich.
Much
of it, in fact, had been brought in by Ehrlich's team, said a senior
Republican fundraiser and as well as a former Steele aide, each
speaking on condition of anonymity because of the sensitivity of the
matter.
Because Steele had decided to run for Senate rather than state
office, Ehrlich wanted to turn the money in Steele's state account
over to the state party for distribution to legislators, the sources
said.
But Steele, who was keeping open the option for a run for
governor
in 2010, wanted to keep the money in his own account, the sources
said. After installing a new treasurer, he had the money transferred
to solidify his control, the sources said.
"I think it's fair to say the Ehrlich folks weren't happy,"
Anderson said. "That's all internal political stuff, but there's no
legal angle."
Ehrlich did not respond to messages yesterday seeking comment.
In another allegation, Fabian claimed that payments to two
vendors
in 2006 for work on the Senate campaign were made from Steele's state
account rather than from his federal coffers.
Campaign finance reports show that printers billed the Senate
campaign late in 2006. The state campaign paid the bills early the
next year - nearly $30,000 to GOP Shoppe and almost $8,000 to Form
Masters. The Senate campaign reported several months later that it
had
been billed in error.
Anderson said any payments from the state campaign were for
services related to his state office. Brian Harlin, owner of GOP
Shoppe, said it is common for candidates to move invoices from one
campaign committee to another after discovering billing errors.
It is a violation of federal campaign finance regulations for a
candidate to use funds raised for a state campaign to pay for
expenses
associated with a federal campaign.
Fabian also alleged that Steele paid the law firm Baker &
Hostetler $75,000 for services that were not provided. The
expenditure
is listed in campaign finance records as an in-kind contribution to
the state Republican Party.
Baker & Hostetler attorney Michael Braden, a former chief counsel
for the RNC, said the payment was for services he and other attorneys
at the firm provided in challenging legislative redistricting in
Maryland in 2002.
The state party paid Braden's firm more than $60,000 between June
2002 and December 2003 to cover "redistricting legal fees," and
Braden
said the subsequent $75,000 was to cover the balance for the firm's
work. Such late payments are not unusual, he said.
None of the people interviewed by The Post said they had been
contacted by federal agents, and it is difficult to evaluate the
extent of the government's inquiry.
In addition, the allegations came from a person who hoped to
benefit by trading on the information. Fabian, 44, was sentenced to
nine years in prison for swindling millions of dollars from
businesses
and banks. Prosecutors alleged that a series of frauds totaled almost
$40 million.
In the memorandum, Wyda asked the court sentencing his client to
"consider Mr. Fabian's willingness to assist the government and, if
necessary, to testify against a prominent Maryland Republican and
rising star on the national stage as evidence of his good character
and efforts to redeem himself."
Over the years, money trouble has been a persistent problem for
Steele. His first race for public office, a 1998 bid for the
Republican nomination for state comptroller, ended nearly $35,000 in
debt, much of it to his sister. He was fined twice by state officials
for missing deadlines to file campaign finance reports and was in
debt
and had faced foreclosure in 2001, the year before he was selected as
Ehrlich's running mate. The state party threw Steele a financial
lifeline, awarding him an unusual $30,000 consulting contract.
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