May 10, 2013 in Idaho

Crapo campaign reports $250K loss from bad loan

By The Spokesman-Review
 

BOISE - Idaho Sen. Mike Crapo’s campaign is filing amended campaign finance reports for 2008 and 2009 to reflect an “investment loss” of $250,000 in the form of a bad loan to an Idaho company. “The loan was never repaid,” Crapo’s campaign said in a statement today, after a third party “absconded with the money.”

The $250,000 loan was made to an Idaho-based limited liability company called Blueberry Guru LLC. “According to Gavin McCaleb, the managing member of the company that invested the loan, Blueberry Guru handed the funds over to a third-party venture that absconded with the money,” the Crapo campaign said, adding that the senator was informed of the loss in late 2010. Since then, the statement said, the campaign has been working with legal representatives in Idaho and California, and voluntarily reported the matter to federal law enforcement. “Ultimately, the FBI and the U.S. Attorney’s office indicated late last year that neither were in a position to pursue the matter further and the investigation was closed.”

The campaign said Crapo himself was not involved in the decision to make the loan, and learned of it only after the investment had gone bad. The campaign has retained a Washington, D.C. attorney to advise it on how to recover the money and how to report it to the FEC; attorney Stephen Ryan advised that recovery is unlikely. “Although the campaign reviewed many avenues to retrieve the money, those efforts have been unsuccessful,” Ryan said, “and it is necessary and appropriate to file amended campaign reports for the time period involved now that this conclusion has been reached.”

The Associated Press reported this morning that the loan was approved by former Crapo campaign manager Jake Ball, who is now on U.S. Rep. Raul Labrador’s staff; Ball didn’t immediately return an AP phone call seeking comment. McCaleb was a longtime friend of Ball, and had known him for 16 years.

This afternoon, news emerged that Ball has now resigned from his current position on Labrador’s staff, though he says it’s unrelated to the loan issue. Ball said he decided to leave to pursue a personal business venture. He said he made no effort to keep the loan of Crapo’s campaign funds to a longtime friend secret, though he didn’t disclose it to Crapo until he was leaving his campaign staff in late 2010.

“We never generally discussed investments,” Ball told the AP. “He trusted me to place cash and I did.”

He said he regrets the campaign lost money, but calculated in 2008 that he’d done sufficient due-diligence on his investment with his friend to conclude that the transaction was appropriate. “I saw what Gavin was going to do on his end, I saw how the funds were going to be held, and I evaluated it to be safe,” he said.

Ball released this statement this afternoon: “I deeply regret that the campaign lost money. I am grateful for the amazing experience I’ve had to work for both Senator Crapo and Congressman Labrador. I have evaluated my future and options. Even though Congressman Labrador offered to support me if I wanted to stay on staff, I elected to depart and pursue a business venture I have been working on for several years. The venture is an e-commerce website, www.childrensbookstore.com.”

Crapo said, “I was not asked about nor approved this loan, and am certainly disappointed that the money was lost. This circumstance occurred during a period of transition between treasurers. I have ensured that the campaign has made the appropriate adjustments to prevent this, or anything similar, from happening in the future.”

Crapo spokesman Lindsay Nothern said the campaign had made no other similar loans; it had invested in CDs and other similar investments to designed to increase campaign funds during off-election years.

McCaleb, who declined comment, hasn’t filed an annual report for Blueberry Guru since 2009. The Idaho Secretary of State’s office said the company has been dissolved.

McCaleb, who is listed on his website as a real estate salesman in Boise with 10 years of experience flipping houses, sought federal bankruptcy protection in 2011. His bankruptcy case was closed in 2012.

Ryan told reporters this afternoon that then-campaign manager Ball loaned the money to McCaleb for his real estate investment firm, and McCaleb invested it into real estate ventures in Nevada and California that went sour. McCaleb is bankrupt, and the campaign can’t collect from him, Ryan said.

Because the campaign was between treasurers, Ball was the sole staffer who approved that use of the campaign funds. “We had a campaign person who made a bad business decision and lost the money,” Ryan said; he said Ball was not fired for the incident. “I think Mr. Ball made an error of judgment in making the investment, but I found no evidence that he intended to benefit personally in any way,” Ryan said. “He did trust someone who he knew well,” and that didn’t turn out well.

As for the campaign donors who gave that $250,000 to Crapo’s campaign, Ryan said, “Certainly there’s been a lot of money that’s been properly used in his campaign.” He said, “I think most people understand that this can happen in a business situation, that somebody makes a mistake and it’s a loss and it’s unfortunate. So there’s probably 250 people who cared enough about the senator to give $1,000 and may have to dig deep and give it again.”

Crapo has $3.3 million piled up in his campaign warchest, far more than any other member of Idaho’s congressional delegation, though he’s not up for election again until 2016.

The Associated Press contributed to this report.

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