When Newt Gingrich’s presidential campaign disclosed in October that it planned to pay the candidate $70,000, the transfer was unusual for a campaign committee. But weeks ago, the former House speaker revised his bill for the third quarter: He actually expected to personally receive $115,000 to reimburse himself for expenses during that period.
The campaign would not explain how the candidate forgot about and then found $45,000 in receipts. Far beyond that payment, the destinations of dollars donated to Mr. Gingrich’s campaign are being obscured by the unprecedented use of a clearly prohibited tactic, The Washington Times found — one that has accompanied the flow of the better part of $1 million in unexplained cash to Mr. Gingrich, family members and top staffers.
The money was reportedly to reimburse Mr. Gingrich and employees for unspecified expenses in what amounted to petty cash exceeding their entire salaries, The Times’ analysis of federal records showed. But the campaign would not say what those expenses were. The Federal Election Commission (FEC) requires the ultimate recipient of campaign dollars to be spelled out [-] even, it specifies, if a staffer originally fronts the money.
Mr. Gingrich was footing various expenses and getting reimbursed rather than having the campaign pay bills like other political committees do because no bank would give the Gingrich campaign a credit card, said spokesman R.C. Hammond.
The only way the petty-cash technique to avoid disclosure would be permitted, election lawyers said, is if receipts were spread across so many companies that not a single one received more than $200.
“That’s an enormous amount of money, and not $200 wound up in the same place? I find that extraordinarily hard to believe,” said Brett Kappel, an election lawyer for Arent Fox LLC, a law firm and lobbying group based in Washington.
Mr. Hammond did not contest the improbability of that, instead offering a novel reason for shirking FEC orders: The campaign chose to disregard the rules, he said, because there were not criminal penalties for doing so.
“I’ve never seen a major presidential campaign run this way — but I’ve only been doing this for 21 years,” Mr. Kappel said of the failure to disclose how money is spent. “This is the kind of issue where you get audited.”
In fact, the FEC flagged the issue on Sept. 22, reminding Gingrich officials that they may not merely report that significant amounts of money were paid to reimburse middlemen for other, untold expenditures. If staff foot a travel bill and are reimbursed, the underlying bills must be disclosed, unless the cumulative total spent by the campaign at each store, hotel, restaurant or other vendor remains less than $200 — a procedure clearly and extensively laid out in FEC materials.
FEC official Chris Jones wrote that as soon as the $200 threshold is crossed, reimbursement reports “must include the complete name and address of the original vendor, as well as the date, amount and detailed purpose of the advance” and ordered the Gingrich campaign to amend its report by itemizing payments or making a note on each certifying that it did not pass the threshold.
He added that some of the campaign’s non-reimbursement payments were too vague, pointing to ones that simply said they were for “operations services.”
“Failure to adequately respond by [Oct. 27] could result in an audit or enforcement action,” he wrote.
Curt reaction
When the Gingrich campaign responded — a month late, on Nov. 29, and without making any changes — its reaction was curt.
“The committee has reviewed all reimbursements to individuals for travel and subsistence and confirms that no further itemization is required,” treasurer Lisa Lisker wrote.
Mr. Hammond explained that saying “no further itemization is required” meant that the campaign was not afraid of the FEC.
“You’re basing this off the FEC would prefer that we comply with their rules. But their rules do not have the backing of law,” Mr. Hammond told The Times.
Mr. Gingrich’s campaign has paid or promised $500,000 in mystery money to 45 employees and the candidate for unspecified reimbursements. It has reported $210,000 more in checks to fundraising consultants and others that mix unspecified reimbursements with compensation, making it impossible to know how much a person was paid.
The campaign committee spent $800,000 directly with travel companies, including for the use of a private jet, so major expenses such as airfare aren’t included in the money paid to people supposedly to reimburse for travel. Hotel expenses are notably largely absent, meaning they likely are included.
Unaccounted-for cash
The biggest recipients of unaccounted-for cash are Mr. Gingrich at $220,000; campaign director Michael Krull at $55,000 to $70,000; and Mr. Hammond at $48,000. Cushman Enterprises, the firm of Mr. Gingrich’s daughter, Jackie Gingrich Cushman, was paid more than $40,000 for “fundraising consulting/travel” and “travel,” on top of $20,000 in straight income.
All of those purported costs are in addition to other major expenses that also were paid by staffers and reimbursed, but for which the campaign did list the underlying receipts.
By comparison, the Mitt Romney campaign — which is four times as large — reimbursed 120 employees $130,000 in unspecified expenses. Mr. Romney’s brother, Scott, by far is the largest recipient at $12,000.
In a sense, Mr. Gingrich’s accounting is a curious inversion of what has transpired with finances connected to Mr. Romney, his chief rival. Business associates who want to give to a super PAC supporting Mr. Romney have formed shell corporations so donor disclosures show only a cryptically named company, without saying where that company got its money.
On the Gingrich side, the black box is on the side of money going out. But the Romney super PAC is not officially connected to the candidate — and Gingrich staffers function as middlemen only if, of course, the money is actually being paid to others. Without the actual payments being included in disclosures, campaign lawyers noted, it is impossible to know if any number of campaign finance laws are being broken.
Reimbursements aside, donated dollars also have gone to Mr. Gingrich and associates for goods provided — but The Times found chronic accounting problems and questionable purposes there, too. The campaign paid $70,000 to Gingrich Productions, Mr. Gingrich’s wife’s company, for Web hosting — but it also paid $60,000 to Rackspace, a major Web-hosting company, over the same time period.
Websites typically have only one host. By comparison, Mr. Romney’s campaign paid between $26,000 and $57,000 to Amazon, another major Web host, records indicate.
Both campaigns had additional expenses for design and other online-related services, but hosting charges are usually separate. While the Gingrich campaign also purchased the Newt.org domain from his wife’s company, the hosting charges did not represent that, a separate $8,400 deal.
Additionally, Mr. Gingrich personally sold to his campaign a mailing list of names of supporters for nearly $50,000 — but a mandated disclosure of significant personal assets months before didn’t include any such list among Mr. Gingrich’s valuable possessions. The watchdog group Citizens for Ethics in Washington filed a complaint alleging the mailing list must have belonged to one of Mr. Gingrich’s business groups and he was selling something that didn’t belong to him to convert campaign donations into personal cash.
The campaign never reported paying the money to Mr. Gingrich in its expenditure reports to the FEC, letting word slip in a newspaper interview instead. A spokesman later acknowledged that the campaign failed to list the payment in its third-quarter reports.
But when the third-quarter report was amended Jan. 31, it was to add the additional money to Mr. Gingrich’s tab, not account for the list payment, The Times found. It wasn’t until the fourth-quarter report that the campaign disclosed a $47,000 payment for Mr. Gingrich’s list, claiming the sale took place on Dec. 24.
By last month’s fourth-quarter disclosure, the campaign had made good on all its promised payments to Mr. Gingrich — even as scores of other creditors, including debts for half the money listed as being spent at actual travel companies, remained.
• Luke Rosiak can be reached at lrosiak@washingtontimes.com.
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