Thursday, March 10, 2016

Gary Johnson 2012 Inc.: Mere Financial Irresponsibility ... or Criminal Fraud?

Former Governor of New Mexico Gary Johnson wai...
Gary Johnson waiting to speak at a Campaign for Liberty event at CPAC. (Photo credit: Gage Skidmore via Wikipedia)
Disclaimer #1: I am not an accountant, let alone a forensic accountant, nor am I an expert on campaign finance law.

Disclaimer #2: I've discussed what I'm about to tell you with at least two people who take an ongoing interest in campaign finance, especially with respect to third party politics. Those two people are George Phillies, a long-time Libertarian Party activist, author of a book  (Funding Liberty) about the finances of Harry Browne's presidential campaigns and a forthcoming book on the finances of Bob Barr's 2008 presidential campaign and Gary Johnson's 2012 campaign (as well as numerous other books on divers topics); and Darcy Richardson, author of numerous books on third party and independent politics. THIS POST DOES NOT NECESSARILY REPRESENT THEIR VIEWS, but they do deserve acknowledgement for calling to my attention, and helping explain, some of the anomalies I'm going to show you.

Here's a short version of the narrative I've been preaching for some time now vis a vis Gary Johnson. It's still a somewhat correct narrative, but there have been a couple of important changes to it that make Johnson sound worse, not better. I'm starting off with sort of the "best case scenario."

In 2012, Gary Johnson ran for president as a Republican and racked up six figures in campaign debt before dropping out of the Republican Party, declaring his candidacy for the Libertarian Party's nomination, and dismissing questions about his campaign debt by assuring Libertarians that that could help him get a government welfare check ("matching funds" from the Federal Elections Commission) to erase that debt. He got the nomination, he got the welfare check, then he ran his general election campaign seven figures into debt -- debt which remains unpaid to this very day -- all while campaigning as the "fiscally responsible" presidential candidate.

Like I said, that narrative remains substantially true, except where things are even worse than it makes then sound. Explaining how much worse and why requires a sort of timeline.

* On April 20, 2012, Johnson's campaign committee filed its FEC report for campaign activity up through the end of March 2012. That report declared that the campaign had outstanding debt of $152,373.85.

* Two weeks later, in early May Johnson received the Libertarian Party's 2012 presidential nomination.

* Later that month, in the campaign's FEC report for the period up through the end of April, it reported a similar debt level: $150,181.35.

* Between receiving the LP's nomination and the end of 2012, the Johnson campaign received approximately $550,000 in "matching funds," courtesy of US taxpayers.

A break from the timeline for one important point of information: When a campaign receives federal taxpayer money in the form of "matching funds," it is required to use that money to pay off campaign debt BEFORE using it for other things.*

No problem. The campaign's debt as of April/May 2012 was only about $150,000, so that left a lot of Uncle Sugar's money to do other things with, right?

Well, no, because now we come to the next point in the timeline:

* In early 2013, the campaign filed AMENDED versions of the April 2012 report in which it disclosed that its debt as of that time had been not about $150,000 after all, but had actually exceeded $1 million.


The idea behind an "amended report" is that mistakes were made on the previous version that need to be corrected, or that new information has become available which can be used to make the reporting more accurate.

If you believe that the $850,000-$900,000 discrepancy between the Johnson campaign's initial reports and the amended versions was an innocent accounting mistake, I'd like to hear from you in comments because I'm just not seeing how that idea passes the smell test.

The far more likely explanation is that the Johnson campaign defrauded the Libertarian Party's convention delegates by lying to them about its debt levels in order to get the presidential nomination -- and that the Johnson campaign also defrauded American taxpayers in order to get a large spendable windfall.

If the campaign's debt had been accurately reported in first place, those "matching funds" would have disappeared to liquidate it and would have fallen far short of doing so. Even with "matching funds," the campaign would have left the 2012 national convention mired in nearly half a million in admitted debt. And, very possibly, without the party's presidential nomination.

Instead, the campaign only had to spend $150,000 paying off its alleged debt, leaving it with $400,000 in ready cash.

If the FEC is paying attention -- and I suspect it is -- Hillary Clinton may not be the only 2016 presidential candidate with a grand jury in her future.

* Thanks to a pseudonymous commenter for pointing out that that claim is incorrect. While "matching funds" can only be used to pay for qualified pre-nomination expenses, that is not the same thing as requiring them to be used to pay off debt for such expenses before e.g. the campaign reimbursing itself for qualified expenses which it has already paid off.

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