Lax control costly to Sen. Mike Crapo's campaign

The loss of $250,000 shows what can happen given loose federal law.

THE ASSOCIATED PRESSMay 20, 2013 

As William Corbett was preparing a final federal elections disclosure for his boss in October 2008, he said there was something important he wasn't told.

Sen. Mike 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.

"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 that he sought to increase the campaign coffers with the loan to a friend, not his own personal wealth.

The episode, however, illustrates the financial dangers inside campaigns. Federal law allows them to invest donor money to increase the size of their coffers, though most of its guidance deals with relatively safe investments, such as money market accounts.

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 disasters.

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 that blame ultimately falls on Ball, not Corbett.

Corbett, a Boise accountant, said his role in Crapo's campaign was always to file FEC reports, not keep tabs on Ball's money juggling.

Aides for Republican U.S. Rep. Mike Simpson and Sen. Jim Risch say their campaigns have safeguards to protect donor money. 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 Simpson spokeswoman Nikki Watts.

Risch's chief of staff, John Sandy, said: "We just don't do investments."

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 to comment, 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 might reduce any penalties.

"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.

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