State Politics

$192,000 for his wife. 81 uses of a lobbyist's home. Crapo election funds draw scrutiny

Flanked by his wife, Susan, and daughter, Stephanie, Sen. Mike Crapo gives a victory speech at the Riverside Hotel on Nov. 8, 2016.
Flanked by his wife, Susan, and daughter, Stephanie, Sen. Mike Crapo gives a victory speech at the Riverside Hotel on Nov. 8, 2016. Idaho Statesman file

Lax campaign finance reporting and ongoing payments to family have prompted new scrutiny of Idaho Sen. Mike Crapo's election funds.

In 9 of the past 11 years, Crapo's elections staff failed to properly report certain campaign spending or donations — for an employee's loan, an annual fundraising event and the use of a lobbyist's Washington, D.C., townhouse, federal records show.

And over the past two decades, Crapo's campaign has paid nearly $200,000 to his wife, Susan Crapo, for work that included creating gift bags for that yearly fundraiser. Her payments shrank during the last two years Sen. Crapo was actually up for election, 2015 and 2016. But she still worked then — in 2017, the campaign gave her a $17,311 lump sum that prompted questions from the Federal Election Commission.

Crapo's campaign has long supported his wife's presence on the payroll, previously telling the Statesman she "provides enormous value." And Sam Neel, an attorney for his campaign committees, said the senator is already addressing the disclosure issues.

"Senator Crapo is committed to adhering to all campaign finance laws and regulations and has proactively taken corrective actions each time a potential oversight has come to his attention," Neel said.

The pattern, however, has drawn attention from a watchdog group — Campaign for Accountability, whose other recent targets include payday lenders, pregnancy crisis centers, rooftop solar providers, various Republican politicians and Google. It filed one round of complaints with the FEC about Crapo's use of the townhouse, and on Thursday asked the Senate Ethics Committee to examine a disclosure issue involving the payments to Susan Crapo.

"Sen. Crapo, the chairman of the Senate Banking Committee, appears to be incapable of keeping track of his own campaign accounts," said Daniel Stevens, the group's executive director.

Other members of Idaho's all-Republican delegation have had fewer issues with their campaign finance reporting, according to a Statesman review of FEC enforcement records.

Rep. Raul Labrador has not been the subject of any FEC investigations. His campaign also paid his wife for several years, and he regularly defended that practice in interviews.

Rep. Mike Simpson and Sen. Jim Risch have faced past complaints — Simpson had one in 2013 for using an Idaho Association of Realtors logo on a fundraising invitation, and Risch received three complaints in 2008 over things like his campaign office being in the same building as his law firm. But the FEC dismissed each of those, deeming them unjustified.

Idaho Republican Sens. Mike Crapo and Jim Risch both attended the May 24, 2018 ceremony where President Donald Trump signed into law Crapo's bill easing some Dodd-Frank bank regulations.

In August, a Massachusetts attorney and Trump administration critic J. Whitfield Larrabee filed a complaint against Risch and two California Republicans regarding certain lobbyist contributions in 2013 and 2014; the attorney believes the money actually came from Ukrainian interests. It is illegal for foreign nationals to donate to candidates for federal office.

That complaint is still pending. Risch told the FEC he does not know anything about the allegations.

The bad loan

In 2008, Crapo's then-campaign manager, Jake Ball, loaned $250,000 from campaign coffers to a longtime friend, Gavin McCaleb. Crapo didn't know of the loan, the senator said in later FEC filings.

The money went to McCaleb’s Boise-based investment company, Blueberry Guru. McCaleb promised to repay the campaign with 8 percent annual interest by Sept. 22, 2009.

Federal law allows campaigns to invest donors' money. As campaign manager, Ball was entrusted with getting higher returns on the campaign's cash.

McCaleb reinvested the money with Pyramid Global Resources, a Nevada real estate venture company. That venture failed, and McCaleb never repaid the loan.

Ball told Crapo about the loss in December 2010, when Ball left to join the staff of the newly elected Labrador.

Not only was Crapo in the dark about the failed investment, but so was the FEC. Loans and debts — including uncollected ones — have to be reported to the federal watchdog when they occur. But Crapo did not report the campaign loss to the FEC until three years later.

According to FEC documents, Crapo hired an attorney to investigate the matter and “at Senator Crapo's instruction ... disclose the transaction” to the Federal Bureau of Investigation.

The FBI turned over its report to federal prosecutors, who in November 2012 declined to pursue charges.

On April 29, 2013, Crapo made a "sua sponte" filing to the FEC saying that a failed investment cost his campaign a quarter-million dollars. Also called a "self-reported voluntary submission," the sua sponte process is designed to streamline investigations and encourage candidates and committees to self-report mistakes. The process also allows for lower fines than if a case is started by other means.

The campaign told the FEC it would amend its 2008-2009 campaign reports to reflect the loan and its nonpayment.

The media learned about the Blueberry Guru matter shortly after Crapo notified the FEC. Ball resigned from Labrador's office when the details became public.

Crapo said he decided to publicly disclose the loss after exhausting his remedies to retrieve the money. Spokesman Lindsay Nothern said Crapo had since tightened his accounting, ending a practice that allowed Ball alone to make the investment. "At least three sets of eyes see this stuff," Nothern said in 2013.

In September 2014, the FEC notified Crapo it had decided to "exercise its prosecutorial discretion" and "close the file."

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Sen. Mike Crapo, R-Idaho, chairman of the Senate Banking Committee, talks to reporters March 6, 2018, as the Senate moved closer to passing legislation to roll back some of the safeguards Congress put in place to prevent a repeat of the 2008 financial crisis. J. Scott Applewhite AP file

The big fundraiser

"Realizing that their oversight regime contained serious flaws" after Blueberry Guru, Crapo's campaign committees underwent an internal review in 2012, according to an FEC report from February 2016.

This review was conducted by Crapo’s new chief of staff, Susan Wheeler. It revealed other reporting errors: Campaign committees were spending significant amounts of money on an annual fundraising event, but had not documented the costs nor reported them to the FEC for three years.

Crapo's Freedom Fund PAC each summer puts on the two-day Hook 'N' Bullet, a fishing and hunting event. Supporter Thomas O'Gara hosts the event at his Silver Springs Ranch in Blaine County.

Whenever a person or business provides goods or services to a campaign without charge, it is considered an “in-kind contribution” and must be reported in campaign finance reports. If someone incurs campaign expenses for which they are reimbursed, that, too must be reported.

In October 2015, for the second time in less than three years, Crapo’s campaign filed a "sua sponte" letter. This one disclosed that it had failed to accurately report Hook 'N' Bullet expenses in 2010, 2011 and 2012.

At the same time, the Freedom Fund reimbursed O’Gara $43,307.37 for 2011 and 2012 event expenses. His main committee, Mike Crapo for U.S. Senate, repaid O’Gara $15,961.34 for the 2010 event.

The FEC determined the problems stemmed from "poor oversight, and because the committees apparently did not receive timely invoices documenting O’Gara’s payments." But the reporting and reimbursement failures weren't intentional, the commission decided. Under an August 2016 “conciliation agreement,” the campaign paid the FEC a $12,600 penalty.

Crapo's conciliation agreement was one of 30 such agreements the FEC issued in 2016. The average penalty of those cases was $19,848.

The controversial condo

In June 2014, amid the Hook 'N' Bullet review, the campaign started using a Washington, D.C., townhouse owned by health care lobbyist Vicki Hart for campaign-related events and meetings, according to FEC filings and media reports. The campaign's use of the townhouse continued regularly through February 2018. But campaign finance reports only mentioned it once — in May 2015, a $1,000 in-kind contribution from Hart for "event facility rental."

The townhouse was the same one where EPA Administrator Scott Pruitt lived for several months in 2017, reportedly paying a well-below-market rate of $50 per night. Crapo's name surfaced this April, when reporters began looking into who else had used the building on Capitol Hill.

"The senator, like other members of Congress, often uses this location for fundraising events because it is located close to his Senate office building,” spokesman Robert Sumner told the Idaho Statesman in April.

On April 26, Crapo's campaign groups told the FEC they had used the townhouse a combined 81 times. They said they had now repaid Hart $8,100 — $100 for each of the times they used her rental.

"Senator Crapo strives to adhere to all FEC laws and regulations and has worked quickly to correct the oversight that occurred regarding the use of the townhouse,” Neel, the counsel for the committees, told the Statesman in May.

Campaign for Accountability filed its formal complaints about the condo in April. Those are still pending, Stevens said.

"Regarding the complaint filed with the FEC by the Campaign for Accountability, all payments have been remitted and disclosed, and we are presently working with the FEC to fully resolve the matter," Neel said earlier this month. "We are not aware of any other pending complaints regarding the senator or any committees with which he is associated.”

Neel emphasized that when Crapo learns about a campaign finance issue, he addresses it.

"Over the last few years, he has undertaken efforts to improve the campaign’s internal controls," Neel said. "As a result of those efforts, some oversights have been discovered and — at the direction of the senator, not some outside group — self-reported to the FEC. Corrective action was taken in each case, which included submitting payments when required, filing amended reports, and working with the FEC to resolve matters. The efforts to refine and improve internal controls will continue."

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Sen. Mike Crapo at the Riverside Hotel on Nov. 8, 2016, the night he was re-elected to Congress. Katherine Jones Idaho Statesman file

Family on the payroll

In 2008, another national watchdog group ranked Crapo among the top three U.S. senators who paid the most to family for campaigning.

Citizens for Responsibility and Ethics in Washington compared campaign spending between 2001 and 2006. In that time, Sen. Crapo's campaign paid Susan Crapo $78,514, it said.

A subsequent report in 2014 ranked Crapo seventh among U.S. senators whose campaigns reimbursed the most to themselves and their family members.

While it is illegal to pay family members to work in congressional offices, it's not against the law to pay them to work on campaigns. The practice draws criticism: Labrador justified paying his wife $2,000 a month from 2011 to 2016 by saying she was the person he trusted most to handle the campaign's books.

Since 2006, Susan Crapo has received another $113,374 in retainers, fees and reimbursements, according to an Idaho Statesman analysis of Crapo's FEC reports. Crapo's office said the payments averaged to just less than $15,000 a year for 14 years. (The earliest payment the Statesman could find came in 2005.)

"She provides labor and items for gift bags used at two major fundraisers that Senator Crapo holds in Idaho each year, and she frequently provides support for campaign activities around the state with him, particularly during campaign years," Crapo's office said in a statement this month.

But in 2015 and 2016, the last time Sen. Crapo was up for election, her payments suddenly changed. The campaign gave Susan Crapo just $965.73 in 2015 and $381 in 2016 for "expense reimbursements."

Crapo was re-elected in November 2016. Less than two months later, Susan Crapo received a $17,311 check for her “work on the 2015-2016 campaign. ... That payment was made in January 2017 and covered work for both years," Crapo’s office said.

Why the delay? "The campaign paid the invoices for the work when the invoices were received, which was in January 2017," Crapo's office said.

The FEC questioned the payment, listed as "event supplies." The expense “was not a reimbursement of event supplies but rather a payment for event supplies (Susan Crapo) made personally,” the campaign responded in a July 26, 2017, letter.

Specifically, the money was for gift bags given to paying guests at the 2015 and 2016 Hook 'N' Bullet and Ski Fest fundraisers held near Sun Valley, Crapo's office told the Statesman. "The items created and provided by Susan Crapo for the gift bags during that time frame include homemade cinnamon bread; homemade raspberry and strawberry jam; neck pillows; homemade salsa; fleece/fur blankets; handcrafted semi-precious stone jewelry; pieced quilts; and homemade granola."

The office could not provide an exact number of the bags but said event attendance ranged from 40 to 200 people. To determine their value, the campaign looked at prices for similar items in craft stores or on websites like Etsy.com.

Stevens said he is is contemplating filing complaints over the gift bags. "If the campaign overpaid Mrs. Crapo for the gifts, it would be a violation of campaign finance laws that prohibit candidates from profiting off of their campaign funds," he said.

His organization's Thursday complaint to the Senate Ethics Committee focused on whether Sen. Crapo fully disclosed his wife's payments in his 2017 personal financial disclosure, separately from the other information given to the FEC. Stevens said Sen. Crapo reported that his primary campaign committee employed Susan Crapo, but not the Freedom Fund.

“Sen. Crapo clearly violated federal laws by failing to disclose that Susan Crapo was employed by his leadership PAC," Stevens said in a press release. "The Senate Ethics Committee should open an inquiry and, if it determines the senator knowingly and willfully violated the law, the committee should refer the matter to the attorney general for further investigation."

Crapo's campaign funds

Sen. Mike Crapo has three campaign-related committees. His principal campaign committee, Mike Crapo for U.S. Senate, had $3,270,053 on hand as of March 31. His leadership PAC, Freedom Fund, reported a balance of $804,811 as April 30. A new fundraising committee formed last year, Crapo Victory Committee, had $134,477 as of March 31.

This report has been updated to reflect Thursday's new complaint from Campaign for Accountability.

Cynthia Sewell is the Idaho Statesman's government watchdog reporter. Contact her at (208) 377-6428, csewell@idahostatesman.com or @CynthiaSewell on Twitter.
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