ARMPAC may have broken the rules

DeLay's camp says the FEC audit uncovered only accounting errors

12 Aug 2005 // U.S. House Majority Leader Tom DeLay's leadership committee may have illegally used $203,483 in restricted money to pay for its federal political activities in 2001 and 2002, according to an audit released Thursday by the Federal Election Commission.

DeLay critics seized on the audit to say it shows his federal committee — Americans for a Republican Majority — willfully violated campaign-finance laws like the loosely affiliated Texans for a Republican Majority. But DeLay's lawyer said the audit found nothing more than accounting errors.

"There's no games here. No tricks. It's all technical stuff," said Donald McGahn II, the lawyer representing ARMPAC in the audit. "Anytime you've raised over $3.5 million, you're not short of money. You don't need to resort to accounting gimmicks to stretch dollars. This is human beings keeping books."

Potential for large fine
However, Melanie Sloan with Citizens for Responsibility and Ethics in Washington said the mere amount of money involved could result in the FEC's levying a $500,000 fine against ARMPAC if the accounting errors were accidental and three times that amount if the money's use was willful and intentional.

Sloan said her group will request a formal FEC investigation of the audit results by the agency's enforcement division.

"What the audit reflects is they were using soft money where they weren't allowed," Sloan said.

"Soft money" under the federal law that existed in 2002 was corporate or individual donations that exceed federal limits. The money could not be used legally for any activities that supported candidates for federal office. It could be used for such things as state voter-registration drives, get-out-the-vote drives and informational ads on issues. "Hard" dollars were restricted money from individual donors that could be used to support candidates.

Important distinction
The distinction was important for DeLay because ARMPAC allowed him to support Republican candidates for Congress. Grateful winners could then repay DeLay by supporting him for leadership positions through the U.S. House Republican Caucus.

The FEC audit of ARMPAC covered activities from Jan. 1, 2001, to Dec. 31, 2002. The audit did not make a judgment about whether ARMPAC's activities were legal, only whether they were properly reported. As a result of the audit, ARMPAC filed 23 amended finance reports for the 24-month period.

The audit found numerous reporting errors. In one instance, the audit said ARMPAC failed to report debts owed to 25 vendors in the amount of $322,306.

McGahn said the error occurred because of a difference of opinion on what to call a debt. He said ARMPAC did not pay the vendors and report it until the committee received a bill, but he said the FEC auditors wanted the debt shown from the time the vendor did the work.

In the more serious instance, the FEC auditors found ARMPAC had been spending money from its nonfederal, soft-money account on federal election activities.

The auditors said this was because ARMPAC allocated too many expenses to the nonfederal account and had some bills paid for by soft money that should have been paid for with legal federal hard dollars.