A political sex scandal is prime low-hanging fruit for the mainstream media. What they are missing, though, is $140,000 spent on behalf of the Herman Cain campaign by a Koch Brothers-backed non-profit operated by Cain’s campaign manager in Wisconsin not set up for political activity. The expenditures weren’t reported, possibly breaking campaign finance law.
Daniel Bice, a reporter for the Milwaukee-Wisconsin Journal-Sentinel, has been hot on the trail of a potential major breach in federal campaign and tax laws by the Cain campaign.
Herman Cain began his campaign on January 1st. Prosperity USA, as a a tax-exempt non-profit 501(c)3 organization, which is barred from participating in partisan politics, says Friends of Herman Cain, the Cain campaign’s fundraising organ, owed the organization about $40,000 for travel services, iPads and chartered flights that it provided to the Cain Campaign in February and March to get them “off the ground.” Bice also reports another chunk of money that went out on behalf of the candidate:
“In addition, sources told the Journal Sentinel that Prosperity USA paid about $100,000 to the Congress of Racial Equality (CORE) shortly before Cain was the featured speaker at an awards dinner in mid-January.”
None of these expenses, or reimbursement for them, appear on the campaign’s reports to the Federal Elections Commission (FEC). There is no record that the Cain’s campaign ever paid the money for travel and services back to the now-defunct PAC.
“According to the financial documents, Prosperity USA received $65,000 in grants in the first half of 2010 and incurred $150,000 in debt to unnamed people as of February 2010. The balance sheet lists $41,113.65 owed to the group from FOH, or Friends of Herman Cain, Cain’s campaign committee,” the Los Angeles Times reports.
Prosperity USA, now defunct, was owned and operated by Mark Block, the famed “smoking man” of the Cain commercial, who is Cain’s Chief of Staff, and his Deputy Chief of Staff, Linda Hansen. The 57-year-old Block was also the former head of the state chapter of Americans for Prosperity, the Koch brothers’ funded organization supporting Governor Scott Walker and the Wisconsin Republican-controlled legislature’s attack of state workers’ unions.
“If they’re engaging in partisan political activity, that’s potentially illegal,” Larry Norton, a lawyer at the firm Womble Carlyle, which specializes in campaign finance law, told the L.A. Times. “At the very least, if the campaign received an in-kind contribution, it should have been reported.”
To the question of whether this was donated in a grey area prior to May, when Cain officially declared, even though he opened his fundraising January 1, 2011, Norton is very specific:
“When you finally announce and you register as a candidate, all of those transactions prior to you registering come under the campaign finance laws,” Noble said. “Any advances made to him should have showed up as a debt if they were still outstanding.”
Cain’s pattern of evasion and deception on the sex scandal is no different than his M.O. on the funding problems. When pressed about the issue by Bice and a handful of other reporters, Cain’s campaign ignored requests for information. When the noise level rose, Cain went on the GOP propaganda channel, Fox News, to deflect the issue.
“I’m not aware of this report, so my staff has not had time to go through it,” Cain told Fox News anchorette Jenna Lee.
“We will take a look at it,” Cain said. “But at this point, I didn’t even know about the report until you brought it up on the show.”
This, in spite of the fact that Bice had been in contact with the campaign for more than 10 days prior to that interview, and Block, his Chief of Staff, shot off this email to Bice:
“Will be able to respond to you, but need to schedule time to review questions. Obviously in the midst of a Presidential campaign I cannot drop everything.”
The money scandal was a victim of bad timing. The Politico sex scandal story that broke on Sunday drowned out the Journal-Sentinel’s investigative reporting on the money scandal.
When pressed by ABC News’ Amy Walter at a National Journal 2012 Preview Panel, Block issued this short comment:
“We’ve retained independent counsel to look at the Milwaukee Journal Sentinel story and report back to us.”
Of course, since Block was at the helm of both organizations, you would think it would be a simpler matter to explain.
Block may be mum on the subject because he is no stranger to violating campaign finance law. He was the campaign manager for former Wisconsin Supreme Court Justice Jon Wilcox in 1997. Accused of election law violation then, Block settled the case by paying a $15,000 fine and staying out of Wisconsin politics for three years. Americans for Prosperity was on the hook for unpaid invoices in the tens of thousands of dollars after Block left the helm of that group, conservative sources told Bice.
Block ran the Wisconsin state chapter of the Koch-funded Americans for Prosperity which organized the Tea Party in that state. He set up the non-profit 501(c)(3) Wisconsin Prosperity, which was supposed to raise $6M a year to turn Wisconsin hard Red.
The problem with both Prosperity USA and Wisconsin Prosperity that may haunt Block with the IRS and the FEC is that both were set up as non-political non-profits. They shelter the trail of money, most likely back to conservative patrons around Wisconsin, and AFP funders like the Koch brothers and the Club for Growth who support hard-Right Libertarian politicians and political movements. Political organizations and charities have to report their giving, and the campaign needs to record and report all such donations as well.
Why set up these entities knowing that they are not able to give directly to a campaign. It may have something to do with the givers trying to mask their giving as donations to charity. Political contributions don’t have the tax deductibility that giving to a 501(c)(3) charity does. Potentially, not only are Cain and his staff on the hook for these gifts, but the Internal Revenue Service could investigate anyone contributing to the “charity.” If they tried to write off the donation in part or in whole, they may be guilty of trying to defraud the government.
Bice reported that records show that Prosperity USA received $150,000 in loans from individuals who could not be identified. The $100K donation to CORE prior to Cain’s speech seems to have come out of that anonymous generosity. CORE’s president, Niger Innis, and his father Roy are no stranger to Wisconsin Tea Party events, where they have made appearances previously.
What is clear is that the Cain campaign has much larger problems than the sex scandal. Cain is the hand-puppet of the Kochs and the extreme Libertarian Right, the upper 5% of the 1%. His staff has engaged in, at best, questionable financial dealings in the operation of his campaign. It is not enough to say “I know nothing about it.”
Mr. Cain, as a CEO, knows that the bottom line is still the bottom line. He should be intimately familiar with the day-to-day finances of his campaign. He is the one responsible for irregularities in reporting. If he can’t keep track of what goes on his campaign, what kind of President would he make?
Demand answers, and tell the lazier aspects of the media, like CNN, to cover this story more fully. Encourage your elected officials to demand an IRS investigation of the 501(c)(3) “charities” that were giving money to Cain’s campaign in violation of the law. It’s time to hold the upper-crust of the 1% who pour big money into candidates and campaigns through back doors just as liable as Cain and his cronies.
My shiny two.