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Sun., May 19, 2013, 8:29 p.m.

Crapo’s campaign suffered from poor financial controls

Idaho Sen. Mike Crapo said earlier that the $250,000 investment loss his campaign suffered in 2008 - and just now disclosed - came at a time when the campaign was between treasurers, so only then-campaign manager Jake Ball authorized the expenditure, in the form of a loan to a longtime friend. But William Corbett, who was Crapo's volunteer campaign treasurer at the time,  tells the AP he was never informed about the transaction. "Obviously, if I would have, it would have been reported," Corbett said. AP reporter John Miller reports that aides for Republican U.S. Rep. Mike Simpson and Sen. Jim Risch say their campaigns have safeguards and internal controls to protect donor money from a similar fate; among other things, investments such as the ones Ball said he employed with his friend would be forbidden. Click below for Miller's full report.

Crapo's campaign suffered from poor controls
By JOHN MILLER, Associated Press

BOISE, Idaho (AP) — As William Corbett was preparing a final federal elections disclosure for his boss, U.S. Sen. Mike Crapo, in October 2008, he said there was something important he wasn't told.

Crapo's then-campaign manager, Jake Ball, shifted $250,000 from a campaign account to another account at now-defunct Washington Mutual that was controlled by Ball's friend, a Boise real-estate investor, for a loan. Corbett, who was leaving as Crapo's volunteer treasurer at the time, said Ball kept him totally in the dark.

"Obviously, if I would have (had knowledge of the transaction), it would have been reported," Corbett told The Associated Press.

Just what happened to the cash became apparent this month when Crapo amended his 2008 and 2009 Federal Election Commission filings, reporting that someone at Pyramid Global Resources in Las Vegas took the money Ball had moved. "A third-party venture ... absconded with the money," Crapo wrote in a statement.

Ball said he stood by a sworn affidavit he gave Crapo's lawyers in March, contending he sought to increase the campaign coffers with the loan with a friend, not his own personal wealth.

The episode, however, illustrates the dangers of loose internal financial controls inside campaigns. Federal law allows campaigns to invest donor money to increase the size of their coffers, though most of its guidance deals with relatively safe investments, like money market accounts, not speculative real estate.

A survey of several of Idaho's congressional delegation showed their financial controls vary, but most say they've got measures in place to avoid what happened in Crapo's campaign.

Crapo's spokesman, Lindsay Nothern, said adjustments under new treasurer, Paul Kilgore, will prevent a repeat. Now, one person writes checks; another signs them; then, the transactions are quickly passed through Kilgore's accounting system, Nothern said.

"Every time somebody makes a move within the campaign today, it's noted by the treasurer — just like it should have been back then," he said, adding blame ultimately falls on Ball, not Corbett. "It's incumbent on Jake's position to report what's going on to the treasurer, and he didn't report this transaction."

Corbett, a Boise accountant, said his role in Crapo's campaign was always to file FEC reports, not keep day-to-day tabs on Ball's juggling of campaign money. "I never signed checks. That was not in my duties," he said.

Ball insisted Crapo, a member of the Senate Banking and Finance committees, gave him "latitude" to pursue higher returns, though the three-term Republican said he only learned of Ball's loan to his friend, Gavin McCaleb, at 8 percent interest in late 2010.

That's when his new treasurer, Kilgore, noticed discrepancies and Ball finally acknowledged the loan to his boss — just before moving to U.S. Rep. Raul Labrador's staff as district director. Ball quit Labrador's post May 9, one day before Crapo filed amended reports.

Aides for Republican U.S. Rep. Mike Simpson and Sen. Jim Risch say their campaigns have safeguards to protect donor money from a similar fate. Among other things, investments such as the ones Ball said he employed with his friend would be forbidden, staffers said.

"Our campaign does not invest its resources in any way and feel like we have strong controls in place over our expenditures," said Nikki Watts, a spokeswoman for Simpson. Added Risch's chief of staff, John Sandy, in a separate interview: "We just don't do investments."

Labrador's chief of staff, Jason Bohrer, didn't return multiple inquiries about his campaign's practices — or Ball's departure.

Crapo, who handed over documents to FEC, anticipates an investigation. His lawyer, Stephen Ryan in Washington, D.C., sidestepped whether Ball broke FEC rules by not reporting the investment immediately to Corbett.

"If you ask 100 different lawyers, you'd get a set of opinions," Ryan said.

FEC spokeswoman Judith Ingram declined comment on Crapo's case.

But campaign experts not involved in this case say the agency doesn't take lightly investment losses kept off a U.S. senator's books for nearly five years. Crapo's campaign could face fines, the most common FEC penalty for civil violations, though by self-reporting Ball's loan he may succeed in reducing any financial penalties levied against him, according to FEC policy.

"As a general matter, federal campaign finance laws don't accommodate hundreds of thousands of dollars disappearing from a campaign account without a paper trail," said Paul S. Ryan, senior counsel for the nonpartisan Campaign Legal Center in Washington, D.C.

Copyright 2013 The Associated Press.

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Betsy Z. Russell
Betsy Z. Russell joined The Spokesman-Review in 1991. She currently is a reporter in the Boise Bureau covering Idaho state government and politics, and other news from Idaho's state capital.

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