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We may have reached peak independent candidate

Meet Jonathan Jenkins, who would apparently like to be on your ballot for the Senate this fall.

Jonathan Jenkins

It’s got a high-tech evangelist for a founder, $6 million in private equity investments, even its own crypto-currency.

No, it’s not a driverless car start-up or some new, life-changing app.

It’s the Indie Party — billed as a “movement” to end the “two-party duopoly” in the United States but built more like a political consulting and technology firm with profit in mind. Its first target — and at this point its only target — is the high-stakes U.S. Senate race featuring Republican Ted Cruz and Democrat Beto O’Rourke.

Its candidate and founder is a self-described “successful tech entrepreneur” and fluent Mandarin speaker named Jonathan Jenkins. The Euless native has been busily gathering the 47,000 or so signatures he needs to qualify for a spot as an independent on the November ballot alongside Cruz and O’Rourke.

[…]

Jenkins is the co-founder of company known as Order With Me (or just WithMe), which helps companies develop pop-up retail outlets. A graduate of Trinity-Euless High School and Abilene Christian College, Jenkins announced the launch of the Indie Party in March and said it had raised some $6.5 million in start-up capital within 72 hours.

Slick videos on the Indie Party website promote independent candidates as the solution to politics as usual, and the party offers a high-tech innovation: a crypto-currency called Indie Tokens that volunteers can earn and sell to donors, and that can be used to buy campaign merchandise or political services from vendors, lawyers and pollsters.

It’s “a party that is owned by you, the people, not by the politicians,” declares one of several videos on the Indie Party website. “This is real transparency, instead of behind closed doors and in the shadows.”

But the Indie Party is not a political party at all. It’s a private, for-profit corporation whose finances are — despite the gauzy advertising — not entirely transparent. And it’s owned not by the voters but by private equity investors who provided the start-up funds.

Indie Party spokesman Mitch Allen identified one of the investors as Las Vegas-based Global Trust Group, and said William Attinger, a former Morgan Stanley derivatives specialist, “led the initial investment” on behalf of the group. Attinger is managing director of venture management for Global Trust Group and is on the board of Raise The Money Inc., an online platform for political fundraising, according to his online bio. Calls and emails left with the Global Trust Group were not returned.

Neither Jenkins nor the Indie Party would identify the three other investors who contributed. Nor did Jenkins or the party say how much Jenkins was paid during his stint as CEO of the Indie Party Co., although Jenkins said his compensation was considerably less than the $600,000 the Indie Party estimated in a U.S. Securities and Exchange filing it would pay officers or directors. At the time of the filing Jenkins was the only disclosed officer or director.

All that will be clarified, Allen said, when Jenkins files his required personal financial disclosure later this summer as a Senate candidate.

You know how some people complains that the Republican and Democratic parties have been taken over by big money corporate interests? With the Indie Party, you can skip the middleman and join a “party” that started out as a big money corporate interest. To once again quote the great philosopher Dogbert, sometimes no sarcastic remark seems adequate. They’ve got a week to turn in their petitions to the Secretary of State (Sec. 142.006. REGULAR FILING DEADLINE FOR APPLICATION. (a) An application for a place on the ballot must be filed not later than 5 p.m. of the 30th day after runoff primary election day, except as provided by Section 202.007.) For what it’s worth, Carole Keeton Strayhorn turned in 223,000 signatures and Kinky Friedman turned in 169,000, both in 2006 for their indy candidacies for Governor. We’ll see how Jenkins compares.

(Note: Strayhorn and Kinky had to turn their sigs in by May 11 that year because the 2006 primary runoffs were held on April 11. The date of the primary runoffs was moved from the second Tuesday in April to the fourth Tuesday via SB100 (see section 6) in 2011. They had less time to collect signatures, but only about 1.2 million people voted in a party primary that year while over 2.5 million did so this year; people who voted in a party primary or a party primary runoff are ineligible to sign a petition for an independent candidate.)

Mentioned in the story but not my excerpt: The Harris County Republican Party has filed a complaint against Jenkins and the Indie Party with the FEC, alleging that “Jenkins and the corporation have violated federal law by providing improper corporate contributions to the Jenkins campaign; illegally coordinating with the Jenkins campaign in getting signatures to put him on the ballot; and failing to file with the FEC as a political committee”. You can find a copy of the complaint here and the attached exhibits here, and you can read into that whatever you want.

Anyway. If you surmise that I am not impressed by Jonathan Jenkins or Indie Party, Incorporated, you would be correct. Whether I need to care about their existence beyond June 21 remains to be seen. Have you observed any of their petition-gatherers? Please leave a comment and let us know.

Stockman trial update

From Tuesday:

Best newspaper graphic ever

“This case is the story of how the defendant over the course of four years exploited the trust and charity of others to pull off a massive scam,” Assistant U.S. Attorney Robert Heberle, of the Justice Department’s public integrity division, told jurors during opening statements in the federal corruption trial.

“It is the story of a man who thinks that the rules are for other people,” Heberle said. “And it is the story of how, dollar by dollar, investigators followed the money and unraveled the defendant’s fraud scheme.”

Heberle said Stockman pulled off the scheme by cheating federal election law, lying to donors and blaming mistakes on his staff.

Heberle outlined several major donations Stockman, a trained accountant, solicited on behalf of charitable groups he was involved in, and said the evidence would show that with the help of two aides, Stockman quickly moved that money from one account to another and spent it to cover personal and campaign expenses.

Defense attorney Sean Buckley, however, had a drastically different take on the same series of financial transactions.

“The core is question of whether Mr. Stockman lied with the intent to steal money” from two major donors, Buckley said.

Buckley described his client as a scrappy, naive and idealistic outsider who lost track of his finances.

See here for the previous update. Just as a reminder, that “scrappy, naive outsider” was first elected to Congress in 1994, and the crimes he is accused of stem from his 2012 House campaign and his unsuccessful 2014 primary bid against Sen. John Cornyn. That’s an awfully long time to remain naive.

From Wednesday:

Former U.S. Congressman Steve Stockman and two aides used a major charitable donation to a cover credit card debt, two spots at a Christian summer camp, a friend’s stint in rehab and a funeral for employee’s wife, according to testimony Wednesday from an FBI agent at Stockman’s federal fraud trial in Houston.

But they didn’t spend any of the $350,000 gift — as Stockman had promised he would at a pitch meeting with a conservative Midwestern mega-donor — on the renovation of a house near Capitol Hill in Washington, D.C., to be used as living quarters and a training facility for young conservatives.

A series of witnesses called by federal prosecutors in the second day of Stockman’s corruption trial traced the path of that $350,000 donation, testifying that Stockman and his associates spent it on an extensive array of expenses, which the donor said he never meant to cover.

[…]

[Conservative megadonor Richard] Uihlein said after spending less than an hour meeting with Stockman at his corporate offices in Pleasant Prairie, Wis. on Jan. 24, 2013, he wrote a check from the Ed Uihlein Family Foundation to the newly elected representative’s charitable foundation for $350,000.

One month prior, at the urging of Larry Pratt, CEO and founder of Gun Owners of America, Uihlein had donated $5,000 to help pay for a group of home-schooled children to be in Washington for Stockman’s swearing in ceremony.

And a year after he made the Freedom House donation, Uihlein would write a $450,000 check to cover a mailing in Stockman’s unsuccessful bid to unseat U.S. Sen. John Cornyn in the Republican Primary, court records in the case show.

And now the GOP legislator and an aide, Thomas Dodd, had arrived with an impressive brochure about Freedom House and asked for money to create their training center for young congressional interns. Uihlein, the CEO of a moving supplies empire, said he liked the idea of helping cover the house’s renovation.

“I felt they were trustworthy,” Uihlein told the jury, under questioning from a federal prosecutor. “And I trusted that they would spend the money the way they said.”

He said he understood from the brochure that Stockman was soliciting the money for a charitable cause through a 501c3 organization, and stressed he would not have given it if he knew it would be spent on the former lawmaker’s personal and campaign costs.

This post has more about the Stockman/Uihlein relationship. Uihlein may have been duped, but he’s far from innocent, or sympathetic. As for Stockman, his defense is to blame everything on the two former aides that have since taken plea deals for their actions in this saga. One of those aides, Jason Posey, has been an associate of Stockman’s since his first Congressional term in the 90’s. Like I said, that’s an awfully long time to remain naive. The prosecution still has more to present, and then we get to the defense, which ought to be amazing. Stay tuned.

Steve Stockman’s trial has begun

Hope you have your popcorn ready.

Best newspaper graphic ever

A year after he was charged with running a wide-ranging scheme to divert charitable donations to pay for campaign and personal expenses, former U.S. Rep. Steve Stockman is scheduled to begin a month-long trial Monday in a Houston federal courtroom.

Jurors could hear testimony in Chief U.S. District Judge Lee H. Rosenthal’s courtroom from about 75 witnesses and sift through thousands of pages of evidence in what prosecutors have characterized as a “white-collar crime spree,” according to court documents.

[…]

“The evidence at trial will show that over a four-year period (Stockman) used a series of sham nonprofit entities to raise over $1 million in fraudulent donations,” according to trial brief filed recently by Justice Department prosecutor Ryan Ellersick, who alleged the former congressman “funneled the fraud proceeds through a web of shell bank accounts before ultimately using the funds to pay for personal expenses and to illegally finance his campaign for federal office.”

Stockman, 61, a resident of Clear Lake, faces 28 criminal counts, including allegations of mail and wire fraud, conspiracy, making false statements to the Federal Election Commission, making excessive campaign contributions, money laundering and filing a false tax return.

Stockman’s lawyer, Sean Buckley, said he expects his client to be fully vindicated. He plans to argue that the upstart lawmaker, who opposed big government and failed to unseat Sen. John Cornyn in the 2014 Republican primary, did nothing intentionally wrong.

“We are absolutely adamant that he didn’t intend to defraud donors or anyone else,” Buckley said. “There’s no allegation of an extravagant lifestyle. He was always one step away from the poverty line.”

See here for the previous update. Gotta love the “I didn’t mean it!” defense. Jury selection is underway. I’ll be checking in periodically as we go.

Stockman trial delayed

Alas.

Best newspaper graphic ever

Former U.S. Rep. Steve Stockman’s trial on federal corruption charges has been pushed back to next year.

The trial, originally scheduled to begin June 5, will now kick off on Jan. 29, 2018, according to an order issued Wednesday by Chief U.S. District Judge Lee Rosenthal.

Stockman’s lawyer had requested the delay last week, asking the judge to put off the trial until “at least January 2018.” The motion to push back the trial had been unopposed.

The lawyer, Richard Kuniansky, said he needed more time to review 142,378 pages of evidence, apparently gathered by the government over the past three and a half years. Kuniansky said he may need the help of a forensic accountant and paralegal.

See here for the background. The request is fair enough, as lawyer Kuniansky is new to the case. I think Stockman is guilty, guilty, guilty, but that’s my opinion and the man deserves a fair trial just like anyone else. Let his attorney get up to speed, we can wait till January.

Stockman trial date set

Mark your calendar.

Best newspaper graphic ever

Former U.S. Rep. Steve Stockman is set to go to trial June 5 on federal corruption charges.

Stockman, a Houston-area Republican, has pleaded not guilty to charges of funneling hundreds of thousands of dollars in charitable donations to himself and his congressional campaign. He was arraigned Monday.

The trial is expected to last one month, according to a scheduling order filed Tuesday. Pretrial motions are due May 12 and responses two weeks later.

[…]

Stockman has cycled through a number of lawyers since his arrest last month. On Thursday, he was given a court-appointed attorney, Richard Kuniansky.

See here for the previous update. How long this actually takes will depend in large part on what happens with the pretrial motions. The Tom DeLay and Ken Paxton sagas were and are as drawn out as they were because the indictments were challenged in the pretrial hearing, and the trial judges’ rulings upholding them were then appealed. I don’t think that will be the case here – there’s nothing so far to suggest that the charges themselves are in any way a stretch – but you never know. If nothing interesting comes out of that, then expect the trial itself to be on the schedule suggested by the story.

Stockman pleads not guilty

And we’re off.

Best newspaper graphic ever

Standing tall, with his hands hanging loosely at his sides, former U.S. Congressman Steve Stockman told a federal magistrate in Houston Monday he understood the criminal charges against him and pleaded not guilty to theft of about $800,000 in charitable donations intended for conservative organizations and associated charges.

Upon Stockman’s request, U.S. Magistrate Judge Nancy Johnson had appointed him a lawyer last week to be paid for by the government until he can land a job. Stockman said he needed to dismiss his hand-picked lawyers because he can’t work while under indictment: His job requires him to travel overseas, which is not permitted under his bond.

Stockman was indicted on 28 federal corruption charges. He said publicly that he expects to be fully vindicated. He is free on bond.

Robert J. Heberle, an attorney from the public integrity division of the Justice Department, told the magistrate Monday he anticipated the trial would last one month and as many as 40 to 50 witnesses could be called for the prosecution. Johnson encouraged the government to whittle down the list. Stockman’s trial is set for June 5 before Chief U.S. District Judge Lee H. Rosenthal for the Southern District of Texas.

Stockman’s new attorney, Richard B. Kuniansky, who defended former accountant Mark Kuhrt in the massive Stanford prosecution several years ago, said after Stockman’s plea that he felt news reports had been unfair in their portrayal of the former lawmaker.

“It’s my understanding that pretty much been a pattern of attack on the character of Mr. Stockman,” Kuniansky said. “We’re looking forward to the truth coming out.”

See here for the background, and here for the pre-hearing version of the story. All I have to add at this point is that I too look forward to the truth coming out.

Steve Stockman claims he’s broke

Pobrecito.

Best newspaper graphic ever

Former Congressman Steve Stockman told a federal magistrate Wednesday he can’t afford to pay for a lawyer to represent him against allegations he helped steal about $800,000 in charitable donations intended for conservative organizations.

U.S. Magistrate Judge Nancy Johnson agreed to appoint a lawyer for him and postponed a hearing on his case until Friday.

Stockman told the judge he needed to dismiss his hand-picked lawyers from the elite firm of Smyser Kaplan & Veselka and ideally he wanted the court to re-appoint them to the case at the government’s expense. She said she’d consider the request.

He confirmed for the judge details on a disclosure form he’d filled out in front of a roomful of defendants in shackles and jail uniforms, indicating he owned a home, a rental property and two vans.

“But you have no assets?” Johnson asked.

“This is a four-year case,” the former lawmaker said, indicating he’d been paying for legal support on these matters for a long time.

See here and here for some background. I would have asked him “what, you can’t use some of that money you stole to pay your lawyers?”, which is no doubt why I’m not a US Magistrate. Well, that and the lack of a law degree. But seriously, this guy. I don’t know why anyone believes a word he says.

In the meantime, feast on this.

The fact that the former congressman is facing multiple felony counts made national news. But one of the most interesting details in the 46-page Stockman indictment escaped notice: The suggestion that Richard Uihlein, one of the country’s biggest conservative political donors, personally wrote a check for $450,571.65 to mail a fake newspaper called The Conservative News to voters across Texas. The paper, which prosecutors say was part of a Stockman-run, secretly funded operation intended to take down Cornyn, included the dubious claims that Cornyn wanted to ban veterans from having guns, had voted to fund abortion, and was secretly working with Democrats to grant amnesty to illegal immigrants.

Mailing a fake newspaper is not a crime, nor is secretly funding a candidate to do so. Thanks to a series of court decisions now known collectively as Citizens United, billionaires are allowed to fund anonymous attacks as long as they abide by an arcane set of tax and campaign finance rules. And Uihlein, who has given more than $43 million to conservative candidates and super PACs since 2011, is a particularly big fish. He is the chief executive of a family-owned shipping and packing materials company that’s confusingly named “Uline,” which Forbes estimated was worth at least $700 million in 2014. And through his private foundation, Uihlein has given millions more to nonprofits that push a conservative policy agenda and train a new generation of political operatives to sell it.

It’s not clear what, if anything, Uihlein knew about Stockman’s fake-news scheme. He is described as a victim in the Stockman case: Prosecutors say Stockman and his staffers fraudulently diverted hundreds of thousands of dollars Uihlein had donated. Uihlein’s funding of the fake-news operation would likely never have become public had Stockman not gotten tangled up with an FBI investigation — meaning this episode exposes a side of the U.S. campaign finance system we don’t often get to see.

[…]

Larry Barry, director of legal affairs at Uline, refused to answer questions about the case, but said in an emailed statement that “we are deeply troubled by the allegations … that certain contributions made in good faith may have been used for unintended personal and political purposes.” Barry referred to Uihlein as “a victim of this alleged misconduct” and said that “we have and will continue to fully cooperate with the Department of Justice in this investigation.”

[…]

One of the biggest unanswered questions in the Stockman case is how he apparently fooled Uihlein twice.

Prosecutors say Posey told Uihlein’s accountant in a May 13, 2014, email ― sent two months after Stockman lost the election ― that some of the money that was supposed to be used for Freedom House had gone to delivering medical supplies to “third world” countries. The email, which also included an attached tax exemption letter for Life Without Limits, allegedly constituted wire fraud ― though prosecutors don’t spell out exactly why.

What the documents don’t clear up is why Uihlein would fund Stockman’s direct mail campaign a year after his donation for Freedom House ― especially since it seemed like so little progress had been made on that first project. “You raise a good question, but it’s not one I can talk about today,” said Dane C. Ball, a Houston lawyer defending Stockman.

An answer may be in the offing if the case goes to trial. If that happens, it’s likely Uihlein would be called to testify, said D.C. campaign finance lawyer Brett Kappel.

“Get your popcorn,” he quipped.

There’s not enough popcorn in the world. Also, I am unreasonably amused by the fact that Uline’s director of legal affairs is named “Larry Barry”. I cannot wait for this trial to begin.

A closer look at the Stockman saga

Chron reporter Lise Olson takes a deep dive into the charges against former Congressman and fulltime hot mess Steve Stockman.

Best newspaper graphic ever

Steve Stockman was soon to board a plane for the United Arab Emirates this month when his unorthodox life took a sudden detour. The outspoken two-time former congressman from Houston was met at the airport by federal agents holding an arrest warrant.

In his own colorful campaign literature, Stockman, 60, has portrayed himself as a gun-loving, abortion-hating activist and philanthropist who has used frequent travels abroad to deliver Christian charity and medical supplies to developing nations.

But a 28-count federal indictment handed down Wednesday describes Stockman as the head of a complex criminal conspiracy. It alleges that he and two aides collected $1.2 million from three U.S.-based foundations and individuals, laundered and misspent most of that money, spied on an unnamed opponent, accepted illegal campaign contributions, funneled money through bogus bank accounts and businesses, and failed to pay taxes on his ill-gotten gains.

Some of that money went for trips to try to “secure millions of dollars from African countries and companies operating” in Africa, the indictment says.

[…]

Jason Posey, 46, has been described as Stockman’s primary accomplice in the scheme to divert donations through companies linked by federal investigators to suburban Houston post office boxes and an array of bank accounts. He has not been arrested. Thomas Dodd, the other former staffer, pleaded guilty earlier this month to two charges related to the same conspiracy and agreed to testify as part of his plea deal.

The purpose of their conspiracy was “to unlawfully enrich themselves and to fund their political activities by fraudulently soliciting and receiving hundreds of thousands of dollars,” the indictment says.

Prosecutors say Stockman used hundreds of thousands of pilfered funds to pay campaign and credit card debts, to cover personal expenses – and to politically attack Sen. John Cornyn (R-Texas).

Stockman’s long-shot Republican primary against Cornyn was the subject of one the scams outlined in the indictment.

In February 2014, Posey solicited and received a $450,000 charitable contribution from an Illinois-based donor that was supposed to finance 800,000 mailings to Texas voters of a campaign publication resembling a “newspaper.” The mass mailings for the Senate primary were part of what Posey later swore in an affidavit was an entirely “independent election expenditure” that was handled entirely by Posey and not by Stockman, one of the candidates.

Those mailings, made to look like real newspapers, championed Stockman’s candidacy and opposed Cornyn.

Posey received the donation through a company he controlled called the Center for the American Future, but he coordinated the mass mailings directly with Stockman in violation of federal campaign finance laws, the indictment says. Stockman and Posey also sought a partial refund of the mailing costs – $214,718.51 – without the donor’s knowledge and split the money, the indictment says.

Prosecutors allege Posey used the money to pay Stockman’s Senate campaign debts and his own personal expenses, including “airfare on a flight departing the United States.”

See here for the most recent update, and here for a large sample of my Stockman archives. A lot of people have been motivated to get involved in politics this year after the Trump debacle of 2016. It was Steve Stockman who provided my motivation to get more involved in politics, after his upset (and upsetting) Congressional victory in 1994. I’ve noted before that former Congressman Nick Lampson was the first candidate I ever donated to, and the first candidate whose fundraiser I attended, back in 1996. That was at least as much about Stockman as it was about Lampson.

The thing about Stockman is that, all politics aside, he has long acted in a shady manner. Do a search of the Houston Press’ archives for Stockman stories and peruse what they were writing about him during that 1995-96 Congressional term of office (Google on “steve stockman site:houstonpress.com”, for example) to see what I mean. In doing that myself, I came across this little nugget, which shows that the past is never truly past:

The squirrelly adventures of Congressman Steve Stockman’s frat-house band of consultants who call themselves Political Won Stop seem to know no limits. The Hill, a Congress-covering weekly in the nation’s capital, first revealed that Stockman’s re-election campaign had paid more than $126,000 to the consultancy, which is owned by 26-year-old Chris Cupit and 25-year-old Jason Posey and is listed on the congressman’s campaign disclosures as having the same Whitman Way address as Stockman’s combination home and election headquarters just outside Friendswood.

Emphasis mine. The fact that Stockman has had a long association with Jason Posey is not suggestive of anything. The fact that Stockman has been involved in at least two questionable-if-not-actually-illegal ventures with Posey is. Whatever we know now, I feel confident there’s more to be uncovered.

Stockman indicted

And here the troubles begin.

Steve Stockman

Former U.S. Rep. Steve Stockman and a former congressional aide were indicted Tuesday by a federal grand jury on charges they stole hundreds of thousands of dollars from charitable foundations to fund campaigns and pay personal expenses.

Stockman, 60, and his former director of special projects, Jason Posey, 46, were charged with 28 criminal counts, including mail and wire fraud, conspiracy, making false statements to the Federal Election Commission, making excessive campaign contributions and money laundering.

Acting U.S. Attorney Abe Martinez in Houston called the indictment “a very significant case” for the office in a brief statement. “The indictment returned by the grand jury today is a significant case alleging serious violations involving use of official positions for personal gain. Violations of the public trust will not be tolerated,” he said.

The case is being jointly prosecuted by the Southern District of Texas and the Washington DC-based Public Integrity Section.

Stockman also faces a charge of filing a false tax return, and Posey is charged with falsifying a sworn statement to obstruct an investigation by federal elections officials.

[…]

Federal investigators say in the indictment that between from May 2010 and October 2014, Stockman brought in about $1.25 million in donations based on false pretenses. He then diverted nearly $285,000 donated to charitable causes to pay for his and Dodd’s personal expenses.

Stockman and Dodd also are accused of receiving $165,000 in charitable donations, which Stockman largely spent to fund his 2012 congressional campaign.

See here, here, and here for the background. Just a thought here, but defending oneself against these kinds of charges is an expensive prospect, and there were questions about how exactly Stockman was supporting himself back when he was in office. I don’t know how he’s going to pay for his lawyers, and I kind of doubt he’s going to be able to raise the money. We’ll see how it goes. The Trib has more.

Stockman’s first day in court

Oh, this is going to be so much fun.

Steve Stockman

Appearing carefree and relaxed with his wife by his side, former U.S. Rep. Steve Stockman told reporters outside a court hearing downtown Friday that he expected “to be vindicated” on allegations that he conspired with staffers to take $775,000 in donations intended for charitable purposes or voter education.

Stockman appeared briefly, in a charcoal suit and tie, before U.S. Magistrate Judge Stephen Smith and put a trio of lawyers from Smyser Kaplan & Veselka, LLP, on record to represent him. The judge set a preliminary hearing on the matter for April 11 before U.S. Magistrate Judge Nancy Johnson.

On the sidewalk outside the federal courthouse, Stockman said he didn’t intend to plead guilty or enter into a plea agreement, adding, “I think ultimately we will be vindicated.”

Stockman’s attorney, Shaun G. Clarke, said he could not comment on the details of the case but he lauded Stockman’s reputation and integrity, while Stockman stood smiling beside him.

“We’ve just met Steve. But a couple of things have become clear — number one, that he’s a man of faith; number two, that he’s a fighter; number three, most of all, that he has tremendous faith in the Constitution of the United States of America,” Clarke said. “Steve has said he is going to fight to clear his name, and we’re going to be there next to him fighting to do it also.”

“We’re here to vindicate an innocent man – Steve Stockman – and that’s what we’re going to do,” he said.”

See here and here for the background. Do yourself a favor and be sure to click on the Chron story link, to see the awesome graphic in that that has Stockman at the center of this bizarre web of PO boxes, shell corporations, and foreign addresses. The only way it could be better is if it were on some paranoid dude’s wall, with push pins and string connecting it all. I’m already visualizing the future documentary on A&E about the Stockman saga, with Bill Kurtis narrating. Don’t let me down, y’all. The Trib has more.

More on the Stockman arrest

I’m just going to leave this here.

Steve Stockman

Former U.S. Rep. Steve Stockman, a Republican whose district stretched from Houston to Beaumont, allegedly conspired with two staffers to bilk conservative foundations out of at least $775,000 in donations meant for charitable purposes or voter education, according to federal court records.

Details of the alleged scam are described in a plea deal signed in Houston by Thomas Dodd, Stockman’s former campaign worker and 2013 congressional special assistant. Dodd pleaded guilty Monday to two counts of conspiracy and has agreed to help authorities build a case against Stockman in return for consideration on his sentencing. The maximum penalty for each charge is 20 years and a fine of up to $250,000.

Stockman was arrested March 16 by a Houston-based FBI agent as he prepared to board a plane to the Middle East, but was released on $25,000 bond after surrendering his passport.

He has been charged with two counts of conspiracy for allegedly colluding with Dodd and another staffer to hide illegal campaign contributions and to divert $350,000 from the Ed Uihlein Family Foundation, based in Lake Forest, Ill. Uihlein had donated funds to renovate a townhouse to be used as a place for congressional interns to gather in Washington D.C. The meeting spot was never created. Dodd’s plea agreement says that he and Stockman also diverted $425,000 from the Rothschild Charitable Foundation and the Rothschild Art Foundation Inc., based in Baltimore.

The Rothschild Foundations donated for charitable purposes and voter education.

Most of the $775,000 in foundation donations was spent on Stockman’s campaign and on credit card bills, according to allegations in Dodd’s plea deal.

Prosecutors claim those illegal acts were part of a larger and more complex scam, court records show. The plea deal outlines a conspiracy among Stockman, Dodd and another staff member that allegedly included two shell companies, bogus campaign contributions, lies to executives at the foundations and a trail of wire and mail fraud.

See here for the background. An earlier story has a copy of the aforementioned plea agreement, which you can see here. This Chron story summarizes the questions that remain about Stockman and his questionable finances, many of which first came up back in 2014. I just want to point out that had Stockman not gotten into his twisted little head to run against John Cornyn in 2014, he’d very likely still be a sitting member of Congress. Funny how these things work.

Steve Stockman gets busted

Well, lookie here.

Steve Stockman

Former U.S. Rep. Steve Stockman, R-Texas, has been charged with violating federal election law.

Stockman conspired with former congressional employees to funnel money intended for a charity to his campaign, according to a sworn statement from an FBI agent unsealed Thursday. He is also accused of making false statements to the Federal Election Commission.

The allegations center on a $350,000 donation Stockman solicited from an unnamed businessman shortly after taking office in 2013, according to the statement. The money was supposed to go to a Las Vegas-based nonprofit called Life Without Limits, but Stockman instead “secretly diverted the funds to pay for a variety of personal expenses and to fund illegal contributions to Stockman’s campaigns for public office,” the statement said.

See here for my extensive Stockman archives. Here’s a longer story from the Chron:

Stockman said after the hearing that he had been targeted for speaking out against the Internal Revenue Service, and cited the right-wing conspiracy theory that contends bureaucrats are secretly running the U.S. government.

“This is part of a deep state that’s continuing to progress,” he said.

[…]

In court documents filed with the criminal complaint, the FBI agent said that shortly after Stockman took office for the second time in January 2013, he solicited a $350,000 donation from an unidentified “wealthy businessman” from Chicago on behalf of a Las Vegas-based nonprofit, Life Without Limits, which had been set up to help people through traumatic events.

The donation ostensibly was for renovation of a so-called Freedom House to serve as a meeting and training facility in Washington, D.C. The businessman’s charitable organization issued a check the same day.

Instead of going to the house project, however, the check was deposited six few days later in a Webster bank account set up by Stockman doing business as Life Without Limits – an account that had a balance of only $33.48 at the time, according to the agent.

“Beginning shortly after the $350,000 charitable donation was deposited into his Life Without Limits account, rather than spending the money on the ‘Freedom House,’ Stockman secretly diverted the funds to pay for a variety of personal expenses and to fund illegal contributions to Stockman’s campaigns for public office,” the agent stated.

Records show he made no “significant” contributions toward the renovations and that the Freedom House never opened.

According to the agent, some of the funds were funneled directly into the campaign through “conduit contributors,” who received cash from the Life Without Limits account and then made contributions to Stockman’s campaign.

Outside of court on Friday, Stockman said the amount in dispute is $15,000 – not the $350,000 described in court. He did not explain the higher dollar amount.

He said he has been investigated by at least three grand juries over the past three years after he tried to have Lois Lerner of the IRS arrested for contempt of congress in July 2014.

Earlier this year, the U.S. Supreme Court rejected an appeal from a nonprofit group that wanted to sue Lerner and other individual IRS officials for allegedly harassing tea party groups that applied for tax-exempt status with burdensome scrutiny in 2014.

As trouble follows Steve Stockman like flies follow a garbage truck, Stockman was investigated for ethical issues in 2014, during his one-term return to Congress after winning a multi-candidate primary for the new CD36. By the end of his term, he and three of his staffers had been subpoenaed by a federal grand jury, which is what I presume led to this. There were also investigations by the House Ethics Committee, the Office of Congressional Ethics, and the Federal Elections Commission, which is an impressive amount of activity for one otherwise inconsequential single-term Congressperson. I’ll say again, he remains one of the most brilliant and underrated political performance artists of our time. We may never see his like again, though we may see his ass in jail by the time this is all said and done. Click2Houston, ThinkProgress, the Press, and Juanita have more.

Another FEC complaint filed against Cruz

We’re up to two.

Not Ted Cruz

Not Ted Cruz

The Texas Democrats have filed a complaint with the Federal Election Commission alleging presidential contender Sen. Ted Cruz and his associates violated campaign finance laws.

The complaint, dated April 22, asserts that Cruz national co-chair, J. Keet Lewis, broke election laws at an official campaign fundraiser in December by asking attendees to donate unlimited amounts, as well as to make corporate contributions to the pro-Cruz Stand for Truth PAC.

Cruz and his wife, Heidi, reportedly attended the Dec. 30 event in Dallas.

Federal law prohibits coordination between candidates and Super PACs. While a candidate or agent of a candidate can solicit donors to a PAC, it is illegal for them to solicit unlimited contributions or corporate contributions to a Super PAC. They can only solicit up to $5,000 from individuals.

The Texas Democrats say Lewis clearly violated those terms when he told donors “If you hit your max then we have a table for you that is the unlimited table. It can take corporate dollars, it can take partnership dollars, and that’s the Super PAC, Stand for Truth…” according to the complaint.

Lewis also said “The method to our madness is this: You max out and then get engaged in the Super PAC,” the filing states.

Lewis has denied wrongdoing and told Politico, which reported the potential violation earlier this month, that he is not an agent of the campaign under federal standards. Lewis was one of roughly 50 co-hosts. Texas Democrats argue that he is, given his national co-chair role.

A copy of the complaint is here. As the story notes, there was another complaint filed with the FEC against the Cruz campaign in January, this one alleging that he failed to disclose financial support from Goldman Sachs and Citibank for his 2012 Senate campaign. I have no idea what the timetable is for either of these, but I won’t be surprised if they are not concluded till after the campaign. The Trib has more.

TPJ files complaint against Cruz

Look out, Ted.

Not Ted Cruz

Not Ted Cruz

In a formal complaint sent to the Federal Election Commission (FEC) today, Texans for Public Justice (TPJ) urged the agency to audit and investigate the Ted Cruz for Senate Committee’s failure to disclose to voters that Goldman Sachs and Citibank secretly financed his hotly contested 2012 U.S. Senate race.

Cruz campaign disclosures filed with the FEC during the 2012 election cycle reported that Ted Cruz loaned his campaign more than $1.4 million. Under federal election law, the Cruz campaign was legally obligated to promptly disclose the real source of these campaign funds: two large personal loans that mega-banks Citibank and Goldman Sachs made to Ted Cruz. Those bank loans would have been legal if the Cruz campaign disclosed them promptly. But Cruz ran in 2012 as a conservative populist who denounced the political power of the big banks that played lead roles in the 2008-2009 market collapse. Cruz broke federal law by not disclosing his huge Citibank and Goldman loans until well after the 2012 election was over. (Together Goldman and Citi have agreed to pay more than $12 billion to settle federal charges related to their roles in the mortgage-securities meltdown.)

As the New York Times recently reported, Ted Cruz first disclosed up to $1 million in Citibank and Goldman loans in a personal financial disclosure that he filed with the U.S. Senate on May 15, 2013. This belated disclosure came more than six months after Cruz’s election to the Senate. Meanwhile the Cruz campaign did not disclose this big-bank cover up to the FEC until January 14, 2016—more than three and a half years after he was legally required to disclose the loans to this agency.

“Ted Cruz lied to Texas voters to hide his campaign financiers on Wall Street,” said TPJ Director Craig McDonald. “Not wanting Tea Party voters to know that he was bankrolled by Citibank and Goldman Sachs, he concocted a fairy tale about his family liquidating its assets to finance his campaign. Politicians can lie to voters, but federal election law prohibits candidates from hiding the true source of hundreds of thousands of dollars.”

The FEC could impose civil penalties for Cruz’s non-disclosure violations in an amount up to 1,000 times the unreported loans. The FEC complaint process is detailed here.

Here’s the Chron story. A copy of the complaint is here. I hadn’t followed this story before – there’s plenty of linkage out there if you need a refresher – but it just got real now. I’m sure there’s no love for Ted Cruz in TPJ’s office, but as Ken Paxton and Rick Perry can attest, it’s no joke when they come after you. Maybe Goldman Sachs can spot you some money for attorney’s fees, Ted. Trail Blazers has more.

Amazon and Bernie

You have to admire the ingenuity.

Sen. Bernie Sanders

It turns out you can’t buy everything on Amazon.com after all.

The online retail giant is quashing an effort by a Texas teenager to use the company’s website to funnel cash into his newly formed pro-Bernie Sanders super PAC.

The Bern2016 super PAC was officially launched [last] week by 15-year-old Sebastian Burnham of Austin — a high school senior who cannot yet vote for his preferred candidate but is legally allowed to create a super PAC to advocate on Sanders’ behalf.

Super PACs can raise unlimited sums of money to advocate for or against federal politicians, although they cannot coordinate their spending with candidates. Conversely, the candidates themselves have virtually no control over these independent efforts.

Burnham, an active blogger who plans to study political science in college, says he wants to focus on raising money from grassroots givers — as Sanders himself has — and he thought he had developed a novel plan to do so.

Until recently, Burnham’s group stated on its website — ProgressivesForBernie.com — that pro-Sanders shoppers could use a specialized Amazon.com link to donate to the super PAC “for free.”

The idea was to have a percentage of every purchase made by users who were referred there by Bern2016 benefit the super PAC.

But Amazon.com isn’t on board.

“It has come to our attention that you are not in compliance with the Associates Program Operating Agreement,” Amazon.com wrote in an email to Burnham after questions from the Center for Public Integrity. “If you are not in compliance within five business days, we will be forced to terminate the Operating Agreement, close your Associates account and withhold advertising fees.”

In an emailed statement, Amazon.com spokesman Tom Cook said the company takes “the appropriate action” when it becomes “aware that an organization or company has violated the operating agreement.”

Burnham called the company’s decision a “setback” for his super PAC, adding that he had removed the specialized Amazon.com link but would continue searching for other similar programs that could be used.

Gotta admit, this wouldn’t have occurred to me. I honestly don’t know how much one might be able to raise via this mechanism – among other things, I’d think that the universe of avid Sanders supporters contains a non-trivial number of people who are repelled by Amazon’s labor practices – but if you get past the questionable legality and the apparent resistance by Amazon, it’s pretty ingenious. Too bad we won’t get a chance to see how it might have worked in practice.

Steve Stockman may leave Congress but his stench will linger

Steve Stockman, ladies and gentlemen.

Steve Stockman doing his best Joe Cocker impersonation

When Rep. Steve Stockman won a long-shot bid in 2012 to return to the House of Representatives, he credited a dream team of tech-savvy volunteers who worked long hours and slept on the floor of a cluttered Webster motorcycle-repair shop that was eventually shut down for building-code violations.

At the end of his two-year term, Stockman is retiring from Congress in the midst of a different kind of mess. He and three of his congressional staffers have been served with subpoenas from a federal grand jury conducting a criminal inquiry.

Stockman also is the subject of a House Ethics Committee investigation, although the committee will lose jurisdiction over him when he leaves Congress at year’s end.

Earlier this year, the Office of Congressional Ethics, a separate investigative body, had questioned whether Stockman conspired with two other staffers to accept contributions from them in violation of federal law and House rules.

The Federal Election Commission has repeatedly threatened to audit Stockman for more than a dozen irregularities in his campaign accounting. It could investigate, take civil action or issue fines even after Stockman leaves Congress, campaign finance experts said.

Stockman and his spokesman, Donny Ferguson, did not comment. Nor has the congressman ever explained the source of $350,000 he reported earning in a congressional financial disclosure in 2013 – filed a full year late.

The subject of the grand jury inquiry is not public information.

But there’s enough in the public record to interest federal prosecutors, who could use the power of subpoenas and of a grand jury to dig deeper, said Peter Zeidenberg, a partner in the law firm Arent Fox and a former U.S. Department of Justice prosecutor.

“I think it would justify a major investigation, and I can see definitely why it would interest a prosecutor to ask questions. … It depends on what the answers are before you can decide whether it would justify a real case,” Zeidenberg said.

See here, here, and here for the background. I have to hand it to the guy, I wasn’t sure if 20 years after his first performance art piece in Congress he’d be able to distinguish himself in a body filled with Louie Gohmerts and Michele Bachmanns, but he exceeded my expectations. After all this time I still can’t tell if he’s just the natural evolution of the wingnut id, or if he’s a grifter operating at a higher level than any of us suspect. I do hope we get that audit and some further investigation out of this, if only to help me decide which one.

Steve Stockman ethics update

He still doesn’t have any, but I’m talking about the investigation into his highly questionable campaign finance activity.

Steve Stockman doing his best Joe Cocker impersonation

The House Ethics Committee extended its probe into U.S. Rep. Steve Stockman on Wednesday, releasing a report detailing allegations that he tried to cover up illegal campaign contributions from people who worked in his congressional office at the time.

The report by the independent Office of Congressional Ethics found “substantial reason to believe” that the Texas Republican conspired with two former staffers to violate federal laws and congressional ethics rules.

Stockman, the report said, “made false statements and endeavored to impede the OCE inquiry” filing payroll documents in December 2013, months after the two men allegedly quit and then were rehired – all in a matter of hours.

[…]

Stockman claimed victory. He noted that while the Ethics Committee extended the inquiry for further review, it did not call for an active investigation by a congressional panel that could issue subpoenas, as recommended by the investigators. Nevertheless the panel did not dismiss the OCE’s findings.

“I am gratified that the Ethics Committee saw the OCE report for what it was and rejected its absurd recommendations and its overreaches,” Stockman said. “While we did experience some (Federal Election Commission) reporting errors, the fact is that we acknowledged and corrected them in due course.”

Legal analysts say it would be unusual for the House Ethics panel to pursue a full-blown investigation of an outgoing congressman. Stockman, who lost a primary election race against U.S. Sen. John Cornyn, cannot run to retain his House seat.

Stockman said the House panel “thanked” him for his cooperation in dealing with their probe, although investigators termed him “non-cooperative.”

There’s a surprise. See here and here for the background. TPM has links to the OCE and House Ethics Committee statements. While it may be that the House won’t bother dealing with someone who’s on his way out, Stockman still has FEC issues and could conceivably wind up facing prosecution. Maybe this will finally be enough to remind Republican primary voters that they should steer clear of him if he ever does run for something again. I mean, if it isn’t enough, I really don’t know what would be. dKos has more.

Steve Stockman’s ongoing FEC issues

“Steve Stockman” and “ethical issues” go together like peanut butter and jelly.

Steve Stockman doing his best Joe Cocker impersonation

For a congressman who has overseen four campaign committees in two decades, Rep. Steve Stockman is having a hard time dissolving his troubled congressional campaign.

Now a lame duck, the Clear Lake Republican first tried on April 16 to terminate Friends of Congressman Steve Stockman, the committee he used before challenging Sen. John Cornyn in the recent Republican Senate primary. But the Federal Election Commission refused to allow the termination, sending two letters last week to the Stockman campaign.

The first threatened legal action. At issue were contributions the campaign had received in the last quarter of 2013 and earmarked for expenses related to the 2014 general election. But by challenging Cornyn, Stockman relinquished any chance of being on the ballot to represent the 36th Congressional district in November 2014.

“Since the candidate is not seeking office and will not participate in the general election, any contribution received for the general election must be returned to the donors,” the FEC’s letter reads. “Although the Commission may take further legal action, your prompt action to refund these contributions will be taken into consideration.”

Stockman’s campaign apparently owes Rep. Eric Cantor’s PAC $5,000, which he may or may not be able to pay back because his campaign has no money, according to its most recent filings. Except that his most recent filings were riddled with errors and omissions, which is what the second letter is about. Maybe the next time he runs for something, the FEC should just provide a babysitter for his campaign to handle all this complicated stuff for him. He’s clearly not capable of doing it on his own.

FEC approves Bitcoin for campaign contributions

It’s the right call.

The Federal Election Commission on Thursday voted to allow political committees to accept Bitcoin donations and outlined the ways that the virtual currency can be used by federally regulated campaigns.

Responding to a request from a political action committee, the commissioners unanimously approved an advisory opinion that defined Bitcoins, which allows for online transactions without going through a bank or other third party, as “money or anything of value” — in essence, cash or an in-kind contribution.

They also imposed some restrictions, ruling that Bitcoin donations will be capped at a cash equivalent of $100 per person per cycle, with the value determined at the time of the donation, and that a complete accounting of name, address and employer must accompany the donation.

Committees can liquidate a Bitcoin contribution immediately, or they can choose to keep it as an investment, in the same way they do with stocks and bonds. Since the value of the virtual currency can fluctuate suddenly, the opportunity for a windfall is real, but is growing rarer as it stabilizes.

The opinion also allows committees to buy Bitcoins on the open market, but prohibits them from using the coins to pay for goods or services. They must be liquidated into United States currency before being spent.

See here for the background, and here for the FEC opinion. I don’t see this as being a big deal – I still think Bitcoin is a lot of sound and fury – but I see no reason not to treat Bitcoin as something of value that can be given to and used by a PAC. Better to allow it and regulate it than to ignore it and hope it goes away.

FEC ponders Bitcoin donations

For those of you that might want to make political contributions via Bitcoin.

The Federal Election Commission appears poised to rule on whether and how campaigns and PACs can accept bitcoins as political contributions. The news comes as Attorney General Greg Abbott’s campaign for governor announced Wednesday that he will accept contributions made in bitcoin.

Two draft advisory opinions have been posted to the FEC website for public comment ahead of the commission’s April 23 meeting.

The first draft, posted Tuesday, would broadly authorize the use of bitcoins not as cash donations, but as in-kind donations, much as stocks and bonds and similar instruments are accepted today. They also could be used to pay campaign bills, provided vendors would accept the novel currency. They could also be deposited into the PAC’s bitcoin digital wallet and kept their to be spent or sold later. The PAC could also use cash to buy additional bitcoins itself, but those coins could only be treated as investments and not as means to pay bills or otherwise transferred. It would also require that the identity of the donor would have to be known and recorded before the donation could be accepted.

But a second draft posted Wednesday contains language that would greatly restrict the use of bitcoins. The bitcoins could be accepted but would have to be converted to cash before they could be exchanged for anything of value, and the cash would have to be deposited in the PACs contribution account. The second draft would also impose a $100 maximum value on how much the bitcoins any one donor gives to a campaign during any one election cycle.

The advisory opinion was requested by Make Your Laws PAC. For the full record of the case, see here.

You can see the two draft opinions here. As we know, Congressman and performance artist Steve Stockman had asked the FEC for an opinion about Bitcoin donations; I wonder how much, if anything, he wound up collecting in Bitcoin. As I’ve said before, I don’t have any problem with this. I doubt it will amount to much, but as long as disclosure requirements are met I don’t see any good reason to treat Bitcoin as anything unusual.

Stockman being investigated for ethics issues

Raise your hand if you’re the least bit surprised by this.

Steve Stockman doing his best Joe Cocker impersonation

The House ethics committee is inquiring into the campaign finances of Rep. Steve Stockman, the Clear Lake Republican who has been questioned repeatedly over the last year about misreported campaign contributions and deficient disclosures.

A spokesman for Stockman acknowledged the inquiry Friday, and the committee itself is expected to announce it Monday.

The Houston Chronicle reported last year that two of Stockman’s staffers were fired in October for making prohibited contributions to the campaign. Stockman spokesman Donny Ferguson told the newspaper then that Jason Posey and Thomas Dodd had been fired from Stockman’s House office.

The scope of the ethics review is not public information, and the statement Ferguson released on Friday did not clearly describe it.

[…]

Brett Kappel, a Washington, D.C. attorney who specializes in campaign-finance law, said the allegations against Stockman, which include reporting contributions under incorrect names, appear “pretty egregious. He’ll be in office until January, and they could proceed with it.”

But Kappel said the committee also could defer to the Federal Election Commission or to the Department of Justice.

I just want to point out that while Stockman will be leaving office in January, he could come back again someday. His, um, unique qualifications for office would make him a contender in any race in a deep-red district.

“Congressman Stockman continues to kind of amaze me … He doesn’t admit any responsibility for what happened in his campaign. Instead I see obfuscation,” said Kathleen Clark, a Washington, D.C.-based professor of law with Washington University who specializes in government ethics.

In addition to the prohibited contributions, the Chronicle has reported on other questions about Stockman’s campaign finances and his personal financial disclosures.

The Chronicle reported:

  • The Clear Lake Republican’s House campaign has been notified by the FEC of dozens of potential problems with its filings in 2012 and 2013, including the misreported donations.
  • Stockman’s personal financial disclosure to the House Ethics Committee was filed nearly a year late and failed to disclose some assets and business affiliations as required by federal law. The disclosure also failed to fully identify the source of $350,000 in income that Stockman claimed in 2011 and 2012.
  • The FEC filed two complaints against Stockman campaigns in the 1990s, one of which resulted in a $40,000 civil penalty, and one in the last two years, which was dismissed.

I’ll say this much for the man: You know exactly what you’re getting with Steve Stockman. The 12-year gap between his tenures in Congress clearly did not cause any erosion in his skills.

Stockman and Bitcoin

Somehow, this doesn’t surprise me.

U.S. Rep. Steve Stockman, a Friendswood Republican with a history of flouting campaign finance laws, entered a new legal gray area this week when he announced his campaign can now accept donations in Bitcoin, a private virtual currency.

Stockman, who is challenging U.S. Sen. John Cornyn of Texas in this year’s Republican primary, was attending an event promoting the NYC Bitcoin Center in New York’s financial district earlier this week when he told a reporter with Business Insider that his campaign could now accept Bitcoin donations. Stockman appeared to confirm the report by posting it on Facebook and Twitter.

Stockman isn’t the first politician to embrace Bitcoin, though he may be the first elected official to do so. Among the legal concerns about Bitcoin campaign donations is that the virtual currency makes it easier to make donations anonymously; federal campaign finance laws require candidates to reveal the names of their contributions. Few businesses currently accept Bitcoin though acceptance has been growing over the last year.

A spokesman with the Federal Elections Commission could not say whether Bitcoin donations are legal. In November, the FEC considered whether to explicitly allow federal candidates and political action committees to accept Bitcoin donations as in-kind donations. The committee deadlocked, 3-3. The commission has not taken up the issue since the November vote, a spokesman said.

Whether Stockman has actually received any Bitcoin donations is unclear. As of Friday morning, his campaign website’s donation page made no mention of Bitcoin. However, in a photo that has circulated online since Tuesday, Stockman is seen at the NYC Bitcoin Center event holding a poster with a scannable QR code on it. The code is a link to a Bitcoin account, but it is not clear if the account is Stockman’s campaign fund. Since Tuesday, the account has received Bitcoin payments worth more than $200.

When asked about the QR code in the photo in an email, NYC Bitcoin Center spokesman Hamdan Azhar wrote back, “Congressman Stockman’s office would probably be best suited to address your question.” A Stockman spokesman has not responded to inquiries about the QR code or whether the campaign has received any Bitcoin donations.

Fine by me if he wants to do that. He can collect Bitcoins, gold bullion, or live chickens as far as I’m concerned, as long as he meets the disclosure requirements. Given that this is Steve Stockman we’re talking about, I don’t have a whole lot of faith in that. But as a matter of philosophy I have no problems with this. As with contributing via text messages, I welcome these innovations as long as proper disclosure is made and all other relevant campaign finance laws are followed. I doubt Bitcoin donations will make any difference to Stockman’s campaign, but hey, a guy can dream if he wants to.

More leftover campaign cash

The Chron writes about a subject I’ve covered before.

BagOfMoney

Former Rep. Shelley Sekula-Gibbs of Houston used leftover campaign funds to buy a life membership in the National Rifle Association. Former Rep. Martin Frost of Dallas paid a $6,000 Federal Election Commission fine. Former Rep. Tom DeLay of Sugar Land hired a media consultant. And former Rep. Henry Bonilla of San Antonio, a Republican lawmaker-turned-lobbyist, showered 35 candidates – including two prominent Democrats – with campaign donations.

Over the past two decades, retired members of the Texas congressional delegation have spent more than a million dollars they had raised for their House and Senate campaigns on expenses incurred after they left office, a Houston Chronicle review of Federal Election Commission records has found. For some of the ex-lawmakers, the expenses continued for years after they last held office in Washington.

The post-congressional spending ranged from small thank-you trinkets for supporters to large expenditures on mailing lists, computer equipment, political consultant fees and donations to other politicians that have allowed some ex-lawmakers to maintain perpetual political operations. Two former lawmakers made payments to family members.

All of the retirement spending was made possible by donors who contributed to the Texas lawmakers’ campaigns while they were holding office. A review of FEC reports indicates that none of the former legislators refunded any funds to their former donors after leaving office.

The existence of these accounts – used by 71 percent of Texas lawmakers who left office over the past two decades – may come as a surprise to many of their constituents. But it’s all perfectly legal – as long as the former officeholders use the money for political or charitable causes.

“You can use campaign funds for any lawful purpose – except they can’t be converted to personal use,” said Michael Toner, former chairman of the Federal Election Commission.

[…]

Campaign watchdogs say the current law allows former officeholders too much latitude in deciding how to use leftover money.

“There’s actually quite a lot of room for lawmakers to finagle their own campaign budgets,” said Craig Holman, a campaign finance expert at the liberal advocacy group Public Citizen.

Holman said the FEC definition of prohibited “personal use” is too narrow and allows former members to indirectly use their funds to benefit family members or themselves by funneling money into organizations they manage or control.

While the Chron story is about former federal officeholders, this is an issue at the state level, too. I thought there was a state law that required all funds to be disbursed within a set period off time, but if that is the case I’ve never seen it enforced. If it were up to me, I’d mandate that any funds left unspent four years after the person’s last day in office would be put into a fund that helps the relevant enforcement agency do its thing. Seems only fitting to me.

[Jim] Turner has the longest-lasting campaign account. The former state legislator and congressman had amassed more than $1 million in campaign funds when he retired rather than face off against veteran Republican Rep. Joe Barton of Ennis in a heavily Republican district. Eight years later, Turner has $990,000 remaining.

Turner said he has kept his campaign account active because he might run for office if “Texas becomes Democratic again.”

“I have always wanted to keep the option open and may want to run for a statewide office,” he said. “I was sidelined by redistricting, but I’ve always enjoyed public service.”

Turner’s last election was in 2002. I don’t care for his strategy of waiting till Texas is sufficiently blue in 2018 or 2022 to maybe use all that money to take another shot at public office. I hope the Democratic primary voters in those years would look askance on someone who sat on a million bucks for 15 or 20 years just in case conditions became favorable for him again instead of using it to help other candidates and causes. My advice to Turner would be to either gut it up and run against Big John Cornyn in 2014 – a million bucks won’t get you that far in a Senate race, but it beats starting out with nothing – or just admit that your time has passed and donate the cash to Battleground Texas. But seriously, don’t keep sitting on it. It’s not doing anyone any good.

Feds get involved in Dewhurst campaign embezzlement case

The plot thickens.

Maybe this is why he was so sad

The campaign manager for Lt. Gov. David Dewhurst, already facing a state investigation over allegations of theft from Dewhurst’s political account, has been accused of also taking at least $1 million from the Republican’s U.S. Senate campaign last year. Federal officials have opened an investigation of their own.

Kenneth “Buddy” Barfield, a longtime political adviser to the lieutenant governor, stole at least $1 million from Dewhurst’s failed Senate campaign for his own use, according to documents filed with the Federal Election Commission by lawyers for Dewhurst.

The Dewhurst campaign’s internal investigation “found that Mr. Barfield knowingly supplied false information to the Dewhurst campaign, which then caused the Dewhurst campaign to report a number of inaccurate transactions” in disclosure reports required under federal law, the lawyers wrote.

[…]

The new disclosure widens the potential criminal liability for Barfield, who is now under investigation by the U.S. Department of Justice. And it deepens the political fallout for Dewhurst, who has said he knew nothing of the financial irregularities until a campaign accountant notified him in early December.

The Dewhurst campaign sent the federal agency extensive amended campaign finance reports that removed from the original reports a long list of transactions “which did not actually occur.”

The letter also indicates that because of Barfield’s machinations, Dewhurst’s U.S. Senate campaign account owes money to his state political account — an apparent violation of federal campaign finance laws — for consulting services.

[…]

Dewhurst campaign officials said Barfield concealed his theft from the state account by falsifying bank deposit slips, vendor invoices and finance reports to make it appear that campaign accounts had far more cash on hand than they actually did. In the meantime, he and his side businesses, such as Alexander Group Consulting, were paid hundreds of thousands of dollars for services — many of which were never delivered.

Barfield associates have said he was involved in high-dollar property deals and other business ventures across the country that might have led to his alleged actions with the campaign accounts.

Federal reports filed by Dewhurst’s Senate campaign showed similar practices by Barfield in handling funds for that account. They included numerous companies — such as campaign and media consultants — who were not paid for their services.

Dewhurst campaign officials also said they were sending refund checks to contributors who made maximum $2,500 donations for the general election campaign last year. Dewhurst was defeated in the GOP primary runoff by Ted Cruz and didn’t make it to the general election.

In all, about $780,000 in refunds will be sent out by the end of the week. Dewhurst apparently had to personally supply some of the money used to issue the refunds.

See here for some background. What a big, ugly mess this is. Barfield apparently had some business dealings that went south, which seem to have left him in a cash crunch. Given that, it’s not too surprising that he might have taken advantage of the large supply of campaign money that had been entrusted to his care. The DMN story indicates that Barfield had financial issues going back to at least 2009, which makes one wonder if Dewhurst was unaware of what was going on with his campaign manager, or if he knew but trusted him anyway. Either way, it sure bit him in the hindquarters. The Statesman has more.

TEC approves texting campaign contributions

From Jerad Najvar:

After brief discussion and comments by Jerad Najvar, attorney for Harris County Republicans, the TEC voted unanimously to approve a draft opinion permitting Texas political committees to accept contributions by text message. APPROVED OPINION HERE (the first page is a diagram of each method)

The request proposed two methods for processing text message contributions. One method would have permitted a political committee to accept small-dollar contributions without collecting the contributor’s identifying information, relying on the ability of political committees to accept small-dollar contributions without itemizing contributor information on its campaign finance reports. Although the FEC has approved this method for unitemized contributions, the TEC has previously decided (in Advisory Opinion 207) that Texas law doesn’t permit acceptance of even the smallest of contributions from an anonymous source. This method, therefore, was not approved.

The second method proposed that the committee use a series of reply text messages to collect the contributor’s name, address, and other required information before processing the contribution. This is the method approved today. The final opinion also confirms that the processing firms do not make a prohibited corporate contribution by advancing a portion of each confirmed text contribution to the political committee pursuant to a normal business agreement (in other words, the committee doesn’t have to wait until the contributor pays the cell phone bill before receiving some of the funds).

See here for the full opinion, and here for the background. I think this is perfectly sensible, and I’m glad to see it happen. I doubt this will be revolutionary, but it’s certainly a tool every candidate and grassroots campaign should have in its bag. I will be very interested to see how this gets deployed in the coming elections.

Texting campaign contributions

I see no reason why this should not be allowed.

A Houston-based PAC is asking the Texas Ethics Commission to approve a proposal that would allow the committee to solicit text message contributions from donors in the state.

The Federal Election Commission has approved a text-to-donate model for federal campaigns, but demand for the service is already spreading down the ballot. The PAC—Harris County Republicans—wants the Ethics Commission to move quickly so donation functionality can be added to a voter mobilization app developed by PAC founder Robert Flanagan.

“When a campaign buys the app from the company, it’s customized for their jurisdiction,” says Jerad Najvar, the PAC’s attorney. “They put it in the app store, and the volunteers for that person’s campaign can then download.”

The app syncs with the state’s voter registration database so that once a volunteer downloads the app, an algorithm runs contacts against the voter file and identifies those who are registered in the jurisdiction. From there, the volunteer can call or email highlighted contacts with one touch. Soon Flanagan hopes users will be forwarding the keyword “donate” to their friends with the touch of a button.

[…]

Najvar thinks the company’s text donation model is readily passable under Texas law, but he’s not sure about the timetable for approval from the state’s Ethics Commission, noting “the TEC is not as efficient as the FEC.”

You can, of course, already make a contribution from your smartphone – just browse to your favorite candidate’s webpage, or go to Act Blue, and give to your heart’s content. The distinction between an app and a webpage on a smartphone is one without much difference – they’re both just fancy ways of accessing a web server and backend database. As this KHOU story notes, there are a few extra wrinkles with texting.

For example, if someone makes a text donation over his employer’s phone and the employer simply pays the company cell phone bill, it could be considered an illegal corporate campaign contribution. Then again, people who aren’t supposed to contribute to campaigns, like foreign nationals, may innocently break the law by texting contributions.

Najvar predicts Texas candidates will simply put a verification screen in their text message donation process, asking contributors to certify that their contributions are legal.

“The issue here, of course, is verification on the candidate side,” said Bob Stein, the Rice University political scientist and KHOU political analyst. “He or she has to prove that these are legitimate campaign contributions and has to be able to back it up with some verification.”

And cell phone carriers are skimming a huge portion of donors’ campaign contributions, political operatives say. In some cases, Najvar says, phone companies are keeping anywhere from 20 percent to 50 percent of text message donations.

Nonetheless, he’s convinced the questions raised by the new technology will be resolved as more campaign money flows in from text messages.

I would think you could solve the verification issue by having the contribution site send back a link for the donor to click to verify that he or she is the bill-paying owner of the phone, and is an American citizen. I suppose that eliminates anyone who’s still using a non-smartphone, but how many such people with an interest in texting campaign contributions could there possibly be? I figure if this catches on, someone will push legislation to limit the amount that a provider could skim off the top. I’ll be surprised if this doesn’t become reality soon. A press release from Attorney Najvar is here, and Texas Watchdog has more.

The Senate fundraising scorecard so far

Here’s what you see for candidates for the US Senate in Texas for the 2009-10 election cycle. I’ve removed the two incumbents plus candidates from previous cycles who are sitll filing finance reports.

Republicans Name Raised Spent Net Cash Debts ======================================================= Ames Jones 49,800 30,369 164,662 0 Shapiro 34,077 99,226 310,407 16,500 Williams, M 206,335 92,377 113,957 51,426 Williams, R 348,081 90,479 388,628 200,501 Total 628,293 412,451 977,654 268,427 Democrats Name Raised Spent Net Cash Debts ======================================================= White 1,867,163 472,119 2,131,638 32,890 Sharp ??? ??? ??? ???

Putting it another way, Bill White raised three times as much as the four Republican candidates combined. Take out the loans, and it’s more like five times as much. He also has more than twice the cash on hand.

So, yeah, I think you can say the Democratic candidates have the early financial lead. Admittedly, Florence Shapiro is hamstrung by the current legislative session; her second quarter numbers will likely be weak as well, especially if there’s a special session. I don’t think it would have made that much difference, however.

And of course all this is before we take into account what John Sharp did. The FEC still doesn’t have Sharp’s details, but BOR’s David Mauro has the scoop:

$515,155.00 – Total contributions other than loans
$514,955.00 – Net contributions other than loans
$2,001,678.10 – Loans made or guaranteed by the candidate

I was sent PDFs with this info shortly thereafter, so I’m sure the FEC page will be updated to reflect this information. The good news for Sharp is that if you subtract the loan money he still outraised the four Republicans. Needless to say, though, that’s nowhere near as impressive as the huge haul he said he had at the deadline. No wonder he clammed up completely after that.

Now this is just the first quarter of a cycle that I believe will go on for at least two full years; more if KBH loses in either race in 2010 and decides to stick it out in DC. Maybe White can’t maintain this pace, maybe Sharp can pick it up; for sure the Republicans, especially Shapiro, can do better than this. As Joe Sheehan likes to say at the Baseball Prospectus, you can’t judge a team’s season by the first few weeks. We’ll know soon enough who will have the funds they need to compete.