We at INDY REPUBLICAN hope all of you reading this post had a great weekend. Most of the staff here did. As promised we are continuing to look into the melodrama surrounding the issue of Governor Mike Pence's $7.4 Million war chest. And to the extent that the funds can be used to help Lt. Governor Eric Holcomb's floundering gubernatorial campaign to replace Mike Pence. Before we get into that we would like to direct our readers attention to a couple of great posts written by fellow blogger Jon Easter at Indy Democrat. The posts cover matters relating to the Governor's race and can be found
here and
here. Now let's get down to business and explore the demonic world that is Indiana Politics! To guide us in our holy quest we shall start with an article written by Brian Howey of
Howey Political Report fame. Howey's article written on August 12th, 2016 is titled
The elusive Pence money Eric Holcomb needs. Howey recounts that on July 19th at the Republican National Convention in Cleveland that Lt. Gov Holcomb gave the vice presidential nominating speech for Mike Pence the man that Holcomb wishes to succeed as Governor. Holcomb is quoted as saying:
"“Tonight I have the privilege to nominate a man I have known for decades and a man America is just getting to know. In Indiana some know Mike Pence as congressman. Others know him as governor. But back home most know him as Mike.”
In addition to Mike Pence being nominated for Vice President there was then a serious chance affected in regards to what could legally be done with the funds that Mike Pence had raised in his aborted reelection campaign for Governor. Howey writes:
"The gubernatorial campaign of Pence which had reported $7.4 million on June 30, came under Federal Election Commission guidelines. Had Pence and his campaign finance director Marty Obst transferred a good chunk of that money not already committed to the Indiana Republican Party, the Republican Governors Association, or Holcomb, who Pence would endorse to replace him as gubernatorial nominee on July 22, Holcomb would be running TV ads these days introducing himself to voters, most who don’t have any idea who he is."
The failure of Pence and finance director Marty Obst to transfer the money to some group that could have given it to Holcomb has been a huge problem for the Holcomb campaign. Especially since Holcomb had only raised about $20,000 to that point while John Gregg had raised over $10 million.
Howey asked Holcomb about the matter and the reply was: "You'll have to ask him." Buckle up this is where this really gets to be a bumpy ride! Howey says that early last week he had been told by
"an informed and reliable Holcomb campaign source speaking on background told me that about $5 million of the Pence funds would eventually shift to the new nominee. “It’s safe to say that somewhere in the ball park of $5 million will come via direct transfers, in-kind or other legally permissible ways,” the source said. “No one really knows the full amount at this point.”
The Holcomb campaign is quoted by Howey as saying that
“The folks over at the Pence campaign knew about this possible scenario and they were prepared for this. They were not caught flat-footed. They knew they would have to have a plan” to transfer funds.
INDY REPUBLICAN is skeptical to say the least that the Pence campaign were prepared for this and had a way to deal with this situation. If that is the case why was this plan not implemented immediately to help Holcomb out? Was the Pence campaign deliberately trying to sabotage Eric Holcomb's bid for Governor? If they had a plan it seems they would have just taken care of this issue already instead of allowing it to keep festering, causing a major headache for Holcomb and the Indiana Republican Party, and continuing to be an overall PR nightmare for Hoosier Republicans! Gary Welsh wrote on his blog back in 2012
about some Republicans that were worried about Mike Pence's campaign having hired Marty Obst to work on his campaign since he had formerly worked for indicted real estate businessman John Bales. Welsh went onto write later in 2012 that
Obst had left the Pence Campaign and then went to work fundraising for both then Senator Lugar's failed bid for re nomination and Mitt Romney's failed campaign for President.
Given the information about how Obst had strong ties to John Bales and how he also failed miserably in his attempts to help Lugar's Senate Primary bid and Mitt Romney's Presidential Campaign. Why in the world does anyone at Holcomb's campaign have confidence in anything that Obst does or says? We sure do not!
Holcomb and Company better hope that Obst who has now transitioned over to the Trump-Pence ticket has his act more together than he has in the past. According to Howey the situation is dire for Holcomb:
On July 29, the Pence campaign transferred $1.24 million to Holcomb. Thus far at this writing on Aug. 11, with just 89 days before the election, that’s been it. The Pence campaign is essentially shutting down, with key members getting out of Dodge before the door slammed their keisters. No one from the Trump/Pence campaign has returned a phone call, email or text.
The timing is critical. Holcomb’s name ID is under 20 percent, compared to Gregg who stands at 61 percent and has been advertising statewide on TV since May 5. A Gregg campaign internal poll Howey Politics Indiana obtained this week had Gregg leading Holcomb 46-39 percent. If I’m Holcomb, those a decent numbers to build on since Gregg has been campaigning for two years, and Holcomb for less than a month.
But timing is critical. Holcomb has about a six week window to introduce himself to voters, build up name ID and attempt to define Gregg in an unflattering light. By early October, the U.S. Senate race between Evan Bayh and Todd Young will be on a path to eclipse the $50 million spent by and on behalf of Dick Lugar, Richard Mourdock and Joe Donnelly in 2012 and it will be dominating the airwaves, as will the Trump and Clinton campaigns. Holcomb will have to get his message out amid the din of other races. The early arrival of the Pence funds would be critical.
To make matters even worse the Democratic Governors Association (DGA) released a
memo on August 10th that the idea of transferring $5 million from the Pence to the Holcomb campaign
"appears to be the latest in a long line of legally questionable moves made by Indiana Republicans. When first informed that federal law restricted Pence from transferring his $7.5 million campaign account to Eric Holcomb, the initial response from Indiana Republicans was denial."
Niki Kelly of the Fort Wayne Journal Gazette writing on July 27th in her article
"'Complications' on Pence money." States that:
Jim Bopp, a GOP attorney and campaign finance expert, initially told The Journal Gazette that state law has no prohibitions on Pence giving his campaign dollars to other state races, and federal law doesn’t apply. But after reviewing several Federal Election Commission advisory opinions he clarified.
“I still think generally what I said was true but obviously there are complications that I’ll be working through. I’ll do my best to figure it out,” Bopp said.
This seriously calls into question claims that the Pence Campaign had carefully looked at the issue of how their campaign funds could legally be transferred to Holcomb! Jim Bopp is regarded even by his legal adversaries as being a very good lawyer and is know for doing his legal homework. So obviously he wasn't asked to look at this matter until after Pence received the Vice Presidential nod. So if the Pence campaign had this issue looked into before why didn't they just have them speak with Mr. Bopp to clear this up? Which would be the sensible thing to do since Bopp has been asked by the Indiana Republican Party to look into this!
Niki Kelly in another article
"Rules impede Pence's donation" written on August 4th mentions a donation that had been sent by Governor Mike Pence to Lt. Gov Holcomb she mentions:
The donation was oddly precise – $1,248,492.04 – which could be related to the additional federal rules complicating the contributions.
It is unclear whether this is the only money that will be given to Holcomb from Pence, whose team did not respond to email and phone calls. Holcomb’s campaign deferred to Pence.
Pence had $7.5 million on hand as of June 30, but several Federal Election Commission rulings suggested he could not transfer a large portion of that – possibly as much as two-thirds, considering the number of large donors Pence had.
Even with the infusion of cash, Holcomb is fighting an uphill battle – trying to raise money and name recognition with less than 100 days until the election.
Democrat John Gregg had $5.8 million on hand as of June 30. Since then, he has collected $824,000 in large donations, but records of his spending during that time aren’t public.
Addressing the issues of the Holcomb/Crouch ticket seeking to obtain $5 million from direct transfers, in-kind contributions (contributions of goods or services such as lodging, office equipment, etc.) or other means the DGA Memo states:
it appears the Republican’s latest “plan” would violate the law if implemented:
1. Federal law provides that “only donations from permissible sources that comply with the Act’s contribution limits may be used to make [] disbursements … to [] non-Federal candidates.” FEC Adv. Op. 2007-26 (Schock).
Pence appears to have transferred his federally permissible funds to Holcomb’s campaign, after the “oddly precise” initial transfer of $1,248,492.04.
2. The article suggests that the Pence campaign may try to make “in-kind” contributions to get around the restrictions. But in-kind contributions, like monetary contributions, are “subject to the source prohibitions and amount limitations of the Act.” FEC Adv. Op. 2006-4 (Tancredo).
If the Pence campaign purchases a good or service with funds that are not federally permissible, and provides that to Holcomb’s campaign, that violates federal law.
None of the staff at
INDY REPUBLICAN are members of the bar. But according to our legal contacts it would appear that the above statement about Pence already having made the above mentioned transfer being all they are allowed to transfer directly to Holcomb by federal law is most likely correct. So it appears likely that avenue has already been exhausted. Also it would appear to be problematic at best for the Pence campaign to try to make in-kind contributions to the Holcomb campaign because purchasing goods or services with funds that are not authorized by Federal law would be a violation of the law. Now if it is unlawful to provide those types of contributions to the Holcomb campaign. It maybe unlawful to receive such contributions. Which would appear to cause another significant issue for both campaigns!
3. The article suggests that there are “legally permissible ways,” other than direct transfers, to move $5 million from Pence’s campaign to Holcomb’s. An unnamed source in an earlier article argued that in the case of individuals who had contributed over the federal limit, funds in excess of the $2,700 limit “could be returned to the donor, who could then donate it back to the Holcomb campaign.”
a. But the FEC addressed that possibility in 2007 and rejected it. In response to Congressman Schock’s request to refund the money to donors, the FEC wrote that “[t]he funds identified to be refunded may not also form the basis to fund another disbursement under the proposals outlined in questions 1, 2, and 3 [which involved proposed contributions to state/local party committees and candidates.” See FEC Adv. Op. 2007-26.
In other words, refunds cannot be provided to donors with the understanding that those funds will, in turn, be provided to the Holcomb campaign.
b. Violating this rule is not only a problem for the Pence campaign; it is also a liability for donors. Federal law provides that, “[n]o person shall make a contribution in the name of another person or knowingly permit his name to be used to effect such a contribution.” 52 U.S.C. § 30122.
If the Pence campaign provides a refund to the donor with the understanding that those funds will be contributed to the Holcomb campaign, the donor has knowingly permitted his name to effectuate a transfer from the Pence campaign to the Holcomb campaign.
Here again is another problem this time for donors to Pence's original campaign. The donor's might be willing to help Pence out with another candidate if he were to ask. But it is unlikely that any of them are going to risk legal trouble just to help Holcomb out!
4. Federal law also prohibits federal candidates from “financing” an entity that raises or spends non-federal funds. See 11 C.F.R. § 300.60(d). A candidate “finances” another entity when his campaign “provide[s] funds in a significant amount” to that entity. See FEC Adv. Op. 2006-4. In that advisory opinion, the FEC determined that the federal candidate would be “financing” another entity when the candidate’s campaign donated $50,000 to the entity and that $50,000 comprised 25% of the entity’s overall receipts.
So if the funds provided by Pence’s campaign comprise 25% or more of the Holcomb campaign’s funds, then the Pence campaign would be “financing” the Holcomb campaign. And the Holcomb campaign would then be limited to raising federal funds ($2,700 per election).
5. When the Pence campaign refunds money to donors, it must do so on a pro rata basis. I.C. 3-9-1-12(f)(1)(E) provides that campaign funds may be distributed back to “[c]ontributors to the committee, on a pro rata basis” upon dissolution. Because the Pence campaign had already spent a chunk of the money it had raised, it means that Pence may not refund 100 percent of the funds that the RGA contributed to his campaign.
6. Governor Pence (and his agents) may not solicit donors to contribute more than $2,700 to Holcomb’s campaign. The McCain-Feingold law allows federal candidates to solicit funds for nonfederal campaigns only up to the federal limit and only from federally permissible sources. See FEC Adv. Op. 2005-2 (“Pursuant to 2 U.S.C. 441i(e)(1)(B) and 11 CFR 300.62, Senator Corzine and his agents may raise up to $2,100 per election5 from an individual donor for a candidate for State or local office.”).
At this point we here are just fighting the urge to pull our hair out! So to sum up not only does it appear that the Pence Team cannot give anymore in direct donations to the Holcomb Campaign. Trying to help with In-Kind Contributions also appears to be a no go! Refunding the money to the donor's is also unlikely to work very well at all! But now if the funds provided by the Pence campaign were to wind up comprising 25% or more of the Holcomb campaigns funds then the Pence campaign by federal law would be "financing" Holcomb's Campaign. And this would subject the Holcomb campaign to raising federal funds and would significantly limit how much anyone person or group could donate to Holcomb's Campaign. The Pence Campaign apparently cannot refund 100% of the money that the Republican Governor's Association (RGA) gave to them! Also with Governor Pence and anyone acting on his behalf being very limited in what funds they can solicit for Holcomb. It would appear that even if a "fix" is found for getting another $5 million from Pence to Holcomb. This appears to be a case where any "cure" would probably hurt Holcomb worse than the Pence "disease"!
It appears that regardless of how this election turns out that the Democratic Party is not going to just simply let Pence and Holcomb slither around campaign finance laws! Now in far to many cases in the past the Daniels Gang of which Holcomb is a member of could count on the Democrats not pursuing this so relentlessly because of the useless hacks that have been appointed to the US Attorney's Office in Indianapolis since the 1970's! And by the elites of both political parties in Indiana threating to go full bore at each other. But because both Todd Young and Evan Bayh are throwing the kitchen sink at each other in their pursuit of being elected into the Senate. All bets are off! Since neither the Republicans or Democrats are willing to lose the Senate race. Unless Young and Bayh decide to start trying to defeat each other using warm feelings. Holcomb is stuck dealing with Mike Pence's screw-ups!
So word to the wise for all of you aspiring politicians out there. Do not ever rely on Mike Pence or anyone he hires to help your campaign! You will regret it! As for Holcomb and his campaign if you are silly enough to keep up this three ring circus of a campaign than you deserve to lose in the mother of all landslides! Have fun reading the want ads! There certainly has to be a position out there for out of work political hacks!
