Cain’s post-candidacy PAC spending raises questions

With charisma and national name recognition but no imminent political prospects, onetime Republican presidential hopeful Herman Cain is using the donor-fueled political action committee created in his name in unusual ways.

The former pizza executive and talk-show host, who briefly led the GOP presidential polls late last year, has created a complicated network of political, nonprofit and for-profit entities that sometimes share funds, campaign finance disclosures filed this week showed.

Cain Connections, the super PAC run by Mr. Cain’s chief of staff, Mark Block, raised $265,000 in the April-to-June quarter, and spent nearly all of it. But hardly any of the PAC’s money appears to have gone toward traditional political advertising or to the causes and candidates Cain Connections cites in its appeals to potential donors.

The PAC has raised money by sending multiple solicitations weekly to supporters, making pleas such as “We’ve got Gov. Scott Walker’s back, and we have committed to help fund critical ads in the coming weeks before the election. We need you” to donate to the Cain committee. The message was referring to Wisconsin’s Republican governor who survived a fierce recall election battle in early June.

But disclosures filed with the Federal Election Commission last weekend show no payments to advertising firms or advocacy groups running ads for Mr. Walker or any other candidate or cause.

Mr. Block said the primary way Cain Connections supports the candidates mentioned is “by endorsing them. Especially if they are endorsing 9-9-9” — Mr. Cain’s proposed solution to the federal deficit crisis.

“We put out a press release,” Mr. Block said.

He said that in the case of Mr. Walker, the super PAC did give money to a Wisconsin group organized as a nonprofit to run ads there, but he could not recall the name of it. He said his group neglected to disclose the transaction because it hadn’t received an invoice.

Campaign finance rules require such expenditures to be reported during the period that the ad ran, specialists said.

“That’s clearly wrong. It has to be reported in the report covering the date incurred ­— the date of the transaction, the date the ads ran, not the date the bill is received,” said Paul S. Ryan, a lawyer at the nonpartisan Campaign Legal Center.

Novel spending ideas

Mr. Cain is not the only former high-profile candidate operating his PAC in novel ways, according to the latest filings with the federal government.

The PAC of former Alaska Gov. Sarah Palin, the 2008 Republican vice-presidential candidate and one of the party’s biggest draws, raised nearly $600,000 in the second quarter of this year, mostly from small donors, but reported giving only $15,000 — less than 3 percent — to candidates.

According to official filings, Mrs. Palin’s political committee spent $355,000 mailing out the solicitations that brought in those checks. It spent $15,000 on airfare and $2,000 on meals, including a $296 tab at Florida’s Bern’s Steakhouse. She spent $21,000 on speechwriters and paid $151,000 to consultants.

Only three candidates received contributions — the traditional purpose of a political action committee ­— from Mrs. Palin’s PAC, each for the maximum legal limit of $5,000. The candidates were Ted Cruz of Texas, Deb Fischer of Nebraska and Richard Mourdock of Indiana, all Senate challengers rather than incumbents.

Mrs. Palin’s staff did not return a request for comment on the PAC’s spending policies.

Spreading Cain’s name

In Mr. Cain’s case, the single biggest recipient of his PAC’s money in the latest quarter was another Cain group: Cain Solutions Inc., which has received $213,000, including $75,000 in the latest reporting period alone. Because it is formed as a nonprofit and not a political committee, there is no way to know how that money was spent or to whom it might have been given.

“I have to talk slowly to make sure I get them right, there are so many of them,” Mr. Block said.

During the presidential campaign, the campaign purchased books by Mr. Cain from a for-profit company based at the same address as Cain Solutions.

Now, Cain Connections’ emails almost always attempt to sell books by Mr. Cain, linking to a book site that says it is paid for by the Cain Foundation, a 501(c)3 charity.

“Beyond the question of whether those solicited are being deceived about how the money will be spent, this case raises concerns about whether multiple entities are being used to hide the flow of money and, ultimately, to provide personal financial benefit to Herman Cain,” said Sheila Krumholz, executive director of the Center for Responsive Politics, which tracks campaign money.

“Otherwise, what is the purpose? Presumably, we would see evidence of this organization’s advocacy in political ads or other materials they’ve produced beyond mere fundraising appeals.”

Value of mailing lists

The status of Mr. Cain’s group as a super PAC allows it to sidestep criticism that its money is not going to political campaigns. By law, super PACs may not contribute directly to candidates.

But Mr. Cain’s organization also has found a way to turn around that process, providing exposure for candidates whose ideologies are agreeable to Mr. Cain and having them provide income to the Cain group by renting out its mailing list. It received $22,000 in list rental fees in the past three months.

Even so, attempts to build a mailing list and raise money have been so intensive that they have put the committee $100,000 in debt. That is on top of the $450,000 in debt left over from Mr. Cain’s presidential campaign, $175,000 of which is owed to the candidate himself, according to the latest FEC records.

While other former candidates, including Texas Gov. Rick Perry, have converted their campaigns into political action committees, Mr. Cain started fresh with one for his ex-candidate advocacy career.

The campaign gave the super PAC its mailing list at no cost, valuing it at more than $500,000, according to super PAC disclosures. That allowed Mr. Cain to leave his debt-saddled campaign behind but strip it of its most valuable asset. If the valuation is accurate, it could have been sold to pay off the presidential campaign’s debts.

But determining where any money goes into Mr. Cain’s various activities is difficult because of rampant “sloppiness,” Mr. Ryan of the Campaign Legal Center said. The presidential campaign did not even report giving away its list.

“If the records aren’t accurate, if the transactions aren’t reported in a timely fashion, how are voters and donors supposed to know if what’s going on is OK?” he said.