Treasurer accuses GOP chairman of misleading donors, hiding $7 million in debt

By Philip Elliott, AP
Wednesday, July 21, 2010

Treasurer accuses GOP chairman of hiding debt

WASHINGTON — The Republican National Committee’s treasurer has accused chairman Michael Steele of hiding more than $7 million in debt to inflate the party’s finances and mislead donors.

Two lawyers working for the committee insisted the RNC never had that kind of debt and has been honest in reporting its finances.

The accusations, made in a memo to RNC budget committee members on Tuesday, were the latest challenge to the embattled Steele and his stewardship of the committee. RNC Treasurer Randy Pullen amended Federal Election Commission reports to show some $3.3 million in debt for April and $3.8 million for May. The RNC, which had crowed about having zero debt, had more than $2 million in debt at the end of June, according to FEC reports filed Tuesday.

In the memo, Mr. Pullen said “fundraising has been falling well short of budgeted numbers” but also saw increases in the bank account.

“The explanation for this was the RNC was doing a great job of controlling expenses,” Pullen wrote in his memo. “This on the surface seemed reasonable; however, I reviewed April and May check registers in May and noted what seemed to be an increasing number of invoices with dates from prior months.”

In other words, the RNC simply wasn’t paying its bills on time to make it look as though it had more cash than it did.

RNC officials said those debts had been paid since the June 30 filing deadline and the committee is now is carrying zero debt. The party’s outside lawyers, Tom Josefiak and Michael Toner, sought to refute the accusations in a message to party members.

“Contrary to the hyperbolic claims in the media reports, the RNC has not at any time carried $7 million of debt and all the debts at issue have been paid,” they wrote.

The two, both former FEC commissioners, said the delay in registering the debt came because officials were checking bills before deciding they needed to be paid — a review that became necessary after the committee reimbursed a staffer for an outing that featured topless entertainers and lesbian bondage. That outing at Voyeur nightclub, which Steele did not join, forced the ouster of Steele’s chief of staff, chief consultant, finance director, deputy finance director and liaison to young Republicans.

Toner and Josefiak also said the RNC “has been and will remain committed to accurate FEC reporting, transparency and fiscal discipline with its donors’ money.”

The new accusations were unlikely to inspire donors or quiet Steele’s critics, who note the RNC is spending money more quickly than it has raised. Donors instead are looking at other Republican committees or independent conservative organizations, and the RNC could be a cash-poor player in November’s midterm elections, when Republicans could make significant gains in House, Senate and gubernatorial races.

The RNC had $10.9 million cash on hand, according its FEC filing that covered the period through June 30. That number, however, was likely less if the committee had paid some $2 million in debt, as officials said had taken place.

By comparison, the Republicans’ committee to elect senators had $19.7 million in the bank. The GOP House committee had $17 million in cash and its effort to elect Republican governors had $40 million in the bank at the end of June.

Few Republicans have rushed to oust Steele despite dozens of political and policy gaffes. The GOP is not eager to get rid of its first African-American chairman.

Steele faces his 168-member central committee next month and ahead of that, Steele’s staff in Washington has been trying to blunt the latest revelations, first reported Wednesday by The Washington Times.

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