In the “Mine’s Bigger” Game Of Campaign Disclosures, Deal May Have Been Caught Stuffing His Warchest

The Tipline brings us this gem, which Jim Galloway has also reported. The AJC updated its coverage today. Congressman and Candidate for Governor Nathan Deal, who last week revealed that his campaign had secured a $250,000 line of credit with undisclosed collateral, has revealed that his campaign used a certificate of deposit bought with campaign cash to secure the line of credit.

Explains spokesperson Harris Blackwood, via the Associated Press:

“It was just a way to keep money flowing without dipping into cash on hand,” Blackwood said.

Huh? Tying up $250,000 of your campaign cash in a certificate of deposit so that you can later borrow that same $250,000 if you need it is an effective way to not dip into your cash on hand?

That just doesn’t add up. The lib’ral AP has for us a possible alternate explanation:

“The maneuver effectively allows the Deal campaign – which has been among the fundraising leaders in the race – to appear to have more money on hand than it does. The $250,000 placed into a CD can still be counted as cash on hand even though it is being used to secure the line of credit, Blackwood said.”

Rick Thompson, former executive secretary of the state ethics commission, said the transaction appeared to be legal because Deal had collateral for the bank line. Thompson suggested the move was likely designed to artificially boost Deal’s bottom line.

“I can’t see why else he would do it,” Thompson said.

O.K., double counting the same dollar seems very Washington D.C., and I can buy that, but I don’t get the campaigns motivation or real tactical advantage to doing this. It seems to be a wasted effort and an exercise in futility. But then again, that also seems very D.C., I guess.

I would like Mr. Blackwood to explain how borrowing your own funds “keeps money flowing without dipping into your cash on hand”. Much like saying “Ghetto Grandmother” was taken out of context, this answer is laughable with any realistic followup question that can be added.

Because I tire of doubting the Deal campaign and their spokespeople at their word, I’ll accept that this maneuver somehow improved cash flow.

Except, that’s impossible. Other than that, it’s a good explanation.

I’m wondering if the Deal camp would like to take another stab at explaining why they felt the need to borrow their own money. I hope they choose their answer carefully. We would hate to take it out of context.

65 comments

  1. Truthteller says:

    Wouldn’t the $250,000 of campaign cash collateral actually have to be listed as an “expenditure” because it’s committed funds?

    They were used to secure a transaction, effectively “buying” a loan… and therefore an expenditure.

    I think the FEC would find this more than curious. Someone should file some paperwork and ask that question…

  2. Who knows their motivation, but I have heard of campaigns buying CDs with their money, hoping they would not need to tap that money until they begin making media buys several months up to a year or more down the road. Purchasing a CD would earn you a better interest rate than having that money in a simple interest bearing checking account.

    Then, just in case you have to meet an unexpected expense, you could access your line of credit and not have to cash in your CD before it has matured.

    Sure it makes their cash on hand appear a little larger, but they probably do in fact have access to that line of credit and the CD will remain in tact even if they draw down the entire line of credit. They wouldn’t be forced to bust the CD unless they quit making payments on the line of credit.

    Candidates loan their campaigns money all of the time, with the intention of future contributions being used to pay themselves back. This also inflates ones cash-on-hand. This is really no different.

    • ByteMe says:

      Purchasing a CD would earn you a better interest rate than having that money in a simple interest bearing checking account.

      For the record, we’re talking the difference between a money market account returning .01% and being completely liquid and a 1-year CD (because anything longer would be beyond the end of the campaign) paying around .45% IF it hasn’t been cashed out before the end of 1 year. Doing the math, the CD earns $450 at the end of one year.

      Compared to the line of credit, which costs about 4% right now (on the amount of the credit line actually used).

      • The point is, they would hope not to use the line of credit, so they will not likely have to ever pay the 4% interest. If they simply wanted to create a “puffed up” cash on hand figure, they could have gotten a much larger line of credit.

        You’re right, the interest rate curve is not as attractive for investors as it once was. Going out longer doesn’t pay as much as it once did, however, 1 year CDs are paying up to 1.6 or 1.7% (Bankrate.com) right now. Why not use that money a little wiser if its going to just sit there?

        On a side note, has Urban Meyer changed his mind about coaching at UF this week? In, out? I’ve had a hard time keeping up.

        • ByteMe says:

          The point is that they’d have to use that line of credit or $200,000 of their “cash on hand” is unavailable for campaigning… the $100K in the CD and the supposed $100K of credit line. If you cash the CD, the collateral is gone, so is the credit line. If you don’t use the credit line… the CD is also unavailable… so that makes no sense.

          As for Meyer, watch Florida today land the top recruiting class again. And then watch them put the kids to good use during the next 4 years. Unlike UGA, which gets great recruiting classes and then does nothing with them.

          • ByteMe says:

            Umm, you know that Brantley’s a better QB, right? Better arm, better field vision. It was never all about Tebow, as you’ll see in the coming year.

          • So he will coach this year? What kid in his right mind would get involved with that Merry-Go-Round? He’d be more appreciated in Tuscaloosa or Athens.

            Yeah, with a 90-27 record, 7-2 in bowl games, Richt really wastes his talent.

            Bucky is correct. Urban Meyer – Tebow = Ron Zook. I really don’t blame him for his many attempts to leave the program. Better to go out a winner.

          • ByteMe says:

            I love it when people who are fans of football programs with no recent national championships talk smack to someone who is a fan of a program with two in the past 4 years. Just cracks me up.

            To answer your question which has already been answered repeatedly in the papers: yes, he will coach. He knows how to do that well (see Bowling Green, Utah, Florida). It’s vacationing he’s having to learn now and he’ll be forced to go on a long one by the AD in the next week or so.

          • Bucky Plyler says:

            Byte, you are free to wallow in your Gator dementia..Gator fans have been awarded the privilege!

  3. Jeremy Jones says:

    Very funny.

    I considered this. Seriously. My thought was to put $100,000 of my own money into a CD for the campaign, and blah, blah. The point would have been to show the passer by of report readers $100,000+ COH. Since so many people seem to think the ability to raise money is a direct relation to the ability to represent and lead in DC. We all know money begets money, so showing $100,000 COH would have resulted in a number of contributions from a certain segment that contributes, not to who they want to win, but to who they think MIGHT win. Now, there are several reasons I did not do it. Most importantly, though legal, it is mis-leading and wrong.

    I do not know if it is a good thing or bad thing that I can think like a politician. Of course, I do not act on those those thoughts, so I guess that might give me a slight leg up. Hopefully.

    http://www.JonesForUs.com

  4. ByteMe says:

    Yes, I’m surprised that the campaign reporting laws allow you to tie up a chunk of campaign cash to get a line of credit and call that an increase in cash. If you cash out the CD, the line of credit must be paid immediately, so there is no net increase in “cash on hand”.

    Does Deal also have a sock in his pants and claiming he’s well hung? Same concept. Eventually the sock has to be washed.

      • IndyInjun says:

        Indeed.

        Something new for a place in which sock puppets are frequently invoked.

        As if the other thingy didn’t have to be washed………

  5. Kellie says:

    Now say you are sorry for assuming the bank and Mr. Walters had done something wrong when issuing this loan. 😉

  6. John Konop says:

    This smells of Washington, this is same style of monkey math from lawmakers is why our country faces the out of control debt. In the private sector you cannot promise future benefits without the money in reserve ie SS, Medicare…… In the private sector you could not do a transaction like this as a way to gain investors without FULL disclosure.

    • Icarus says:

      As I said in the above post, this came from the tipline. It is our stated policy on the tipline not to reveal the source of the tips.

      And, sometimes we like to spend a little time on the story to try to see if a different angle pans out with additional research. Sometimes they do, sometimes they don’t.

      • kcordell says:

        Icarus, thanks for your explanation. My post wasn’t meant as a slam against PP. I was trying to inform people that this had been out a while. I can see where my choice of words would come across as criticism. For that I apologize. I may attack posters at times but, I would not complain about a site that allows “free” speech.

  7. Capt. Jack Sparrow says:

    Fuzzy Math – a hallmark of DC!

    The real question is did the Deal campaign brag about his cash on hand and use a specific dollar figure while knowing that $250K was fake.

    The Real Deal…yea, right.

  8. GOPGeorgia says:

    Questions.

    Does everyone agree that Deal had the $250,000 cash on hand used to buy the CD? Does everyone agree that he wasn’t going to spend that money anytime soon? Does everyone agree that he would get a better return on his money by buying a cd? If all of these are yes, then I have a few more questions. Does it make sense to use an asset to hit a goal of a higher amount of cash one hand? (some of you will say no, but it‘s not illegal.) As long as he pays back the loan first and then breaks the CD, he’s done creative financing to give himself more money for the short term without much cost. His CD earns interest, a house for collateral does not (it may or may not appreciate.)

    I recommend to my customers to buy a CD and use it for collateral to build their credit all the time.

    • Icarus says:

      Then by all means Doug, I hope this increased Deal’s FICO score.

      The issue I have is the constant spin we get from Deal’s office, that bears no relation to reality whatsoever.

      I didn’t accuse Deal of anything illegal. There’s nothing legal about stuffing a sock down your shorts if you think you need to do that. And he apparently did. So be it. I hope he likes his new look.

      But when asked why he borrowed his own money, his spokesperson said it was “to keep money flowing without dipping into cash on hand.” Please tell me how this is even possible. If it is not, how is this not an outright lie?

      Other questions still not answered by the Deal spin machine include “What IS the proper context for the term ‘Ghetto Grandmother’?”, “Please explain the strategy behind using said term and then three days later using it in a fundraising appeal.”, and “You had ‘some constituents’ who asked about Obama’s birth certificate, and you asked for it, but you also had some constituents ask to investigate Cheney’s coordination of 9/11 as an inside job. Do you intend to ask for an investigation of that as well?”

      Deal had a great career. He is, unfortunately, embarassing himself. It’s time for him to go enjoy some of Sonny’s new boat ramps.

    • ByteMe says:

      Yes. No (Primary is in less than 6 months). Compared to what?

      Even though they aren’t all yes, I’ll keep playing along anyway: It makes sense to use an illiquid asset to create a liquid asset, but not to take a liquid asset and play a shell game to make it look like you have twice as much liquid assets. He has NOT given himself more money, he’s just bumped a number on a report. His CD only earns interest if it doesn’t have a penalty for early withdrawal or he keeps it in there until it matures.

      Your last line makes sense only if you’re trying to build credit, not if you’re trying to run for office.

      • John Konop says:

        GOPGeorgia,

        If I went to you to invest in a business and I claimed I had 500K to buy inventory…….and I did what Deal did you realize that is illegal?

        So why should a politician be able to manipulate and misrepresent his campaign donations to get voters and it be illegal to do the same thing to raise money in the private sector?

        Do you not see the ethical dilemma?

    • GOPGeorgia says:

      Deals campaign had taken some unfortunate turns. The “ghetto grandmother” remark was horrible. The statement “to keep money flowing without dipping into cash on hand,” is ambiguous. They need to explain it more. My explanation on why deal asked for President Obamas birth certificate is still plausible. He wanted to raise money from “birthers” nationwide. That’s my theory, not their explanations.

      Banks offer CD’s that mature in 3 months. If his campaign were a business and he was trying to sell it, he disclosed that he had a loan of $250,000. Serious buyers would ask what the security on that loan was.

      There’s no such thing as a perfect candidate. Nathan, John, Karen, Eric, and Ray all have baggage that is obvious to me. Scott is growing on me, but I don’t know enough about Scott or Chapman. As I find out more about them, I might see baggage there as well. Barnes has baggage and a previous boarding pass. He was removed for not being a good captain of the ship of state.

        • GOPGeorgia says:

          Ambiguous as I don’t understand their reasoning either, but I’ll give them the opportunity to do some more explaining (if they want to) while I am considering the situation. If they have told us all they are going to tell us, then we can judge based upon what’s been presented so far. If they have something better to say, I’ll listen. I don’t cast my vote until July and it’s not committed in this race.

      • John Konop says:

        GOPGeorgia

        The difference between you and I, is I think ALL office holders should be held to a hire standard than people in the private sector, while you think it is ok whatever they do, if the are on your team, and not convicted.

        • GOPGeorgia says:

          There are a lot more differences between us than just one. I understand reason and go by innocent until proven guilty, you are constantly coming at people with a pitchfork at the first sign of a rumor.

          • John Konop says:

            GOPGeorgia,

            This is not a rumor! The real question is if you think ethics matter and should candidates be held to a lower or higher standard than people in the private sector. Obviously you think winning is more important than ethics! So when party leaders like you on both sides create and support a Richardson style officeholder, the hands of party leaders like you have dirt on them as well!

          • GOPGeorgia says:

            JK,

            My remarks about you are not limited to this one situation. It is your MO and I can show you other times where you have held this same attitude.

            This my stance on ethics: I introduced a resolution at the last state GOP EC meeting and it passed unanomiously.

            “Whereas, the Georgia Republican Party is committed to protect, and defend, the expectation of the highest of ethical standards from members of our party. Whereas we condemn any abuse of power, misappropriation of authority, violation of public trust, and collaboration or cover up of any of the same, regardless of party affiliation. nowtherefore be it resolved, we call upon all elected Republicans and Republican candidates to repeat this pledge, and to uphold the sacred duties entrusted to them by the voters.”

      • NorthGAGOP says:

        I guess the fact that the head of the bank that offered him the LOC has donated over $12K to his campaign is not a concern?

        • Icarus says:

          To me, no, it’s not.

          The loan is secured by cash held in the bank. Assuming the loan was done in the way it has been described, no bank funds are at risk.

          But that assumes what we’ve been told is true. The explanation we were given for the reason for the loan can not be.

          It would be nice to take a peek at the loan docs to see what the terms were, and that this was a loan that would be available to any other borrower. If a CD secured loan using campaign funds, then most anyone could get that.

      • John Konop says:

        GOPGeorgia,

        In the real world if I am soliciting investors you must up-front disclose material issues. And it is illegal to solicit investors misrepresenting your finical position.

        • GOPGeorgia says:

          JK,

          Apple, orange. Think he has does something illegal/unethical? The DA and the state ethics commission are whom you should be addressing this to. Go file.

          • GOPGeorgia says:

            JK,

            I get that you like to run your mouth at me instead of doing something yourself. If you are convinced that something is wrong. do something about it. Are you too lazy or a coward?

          • John Konop says:

            GOP.

            We all get the system is controlled by many unethical people like you on both sides. And yes many of us are doing something about this by exposing this behavior.

          • GOPGeorgia says:

            Konop the liar,

            Please explain how I am any more unethical than you in this situation. We are both talking about it, so you aren’t doing anything more than I am.

            So now, I control the system? Did you take your meds today? The action in this case has already been exposed. If you think there is something there, do something more than talk about it if you feel that strongly about it.

            Why must you lie so much?

          • Icarus says:

            Doug, we’ve been sending more folks here to time out lately, especially for name calling. You just challenged a man that spent 2 years and a few hundred thousand dollars of his own money to fight excessive spending in Washington to “do something”.

            And then, when you don’t like his answers, you resort to calling him “Konop the liar”.

            Yet, as the 9th district Chairman, you refuse to acknowedge that the Deal campaign’s claim that borrowing their own money somehow improved their cash flow is untrue, instead calling the answer “ambiguous”.

            Whether or not you’ve descended into “hack” territory is for each reader to judge. But to decide to constantly berate a commenter because he dares to challenge you will not happen here.

            Stand down.

          • GOPGeorgia says:

            Icarus,

            I will not be standing down when I am called things that I am not. I will be standing up for myself. If you feel the need to ban me for defending myself, have it at.

            Konop called me unethical. I feel this is untrue and I will call him a liar every time he lies about me. I had no inside knowledge on any campaigns questionable activities before I read it here.

            He has many problems. One of his problems is that he wants me to call on people who are running for office to drop out. I won’t be doing that. The voters can decide if something comes to light about a candidate whether or not they want to elect them. I won’t be goaded into calling people to drop put, telling people who to vote for, and who not to vote for.

            If you don’t like me calling him a liar, then perhaps he should stop lying about me. He doesn’t have license to tell others anything about me that he can’t prove.

            For clarification, nothing I do on is should be construed as speaking as the Ninth District Chairman, unless I proclaim it as such. It is as an individual. Even if I were state GOP Chairman, which I have no aspirations for, what make you (or him) think that a party chairman can do much with this group of candidates (or any GOP candidate in Georgia) as far as telling them on what they can or can’t do. Other than the day of qualifying, which could land one in court, candidates never have to answer to Chairmen. Herding cats would be easier.

            I am not the state ethics commission. If you or Konop have something you feel that should go to their attention, send it there. If you don’t, then it’s not as bad as you say it is. I am not any campaigns spokesperson and if you want clarification on something, address it with that campaign. I may comment on a situation to spark a little debate, but I don’t represent any campaign.

            I know all about Mr. Konops previous run. For those that don’t, I will share some information. He got 17% in a GOP primary against Congressman Price. He did not run for two years, he ran for 10 months, according to his filings with the FEC. He raised less than $8,000 from individuals other than himself. He contributed 50K and loaned his campaign another 40k (20K on two separate occasions.)

            I ran for a lower office, raised more funds, won the primary, and when I didn’t win in the general, I didn’t go sit on the sidelines to become a rock thrower. I’ve been working for the party for 22 years. I respect those who run to make a difference. I am unimpressed that he ran for office once. He’s done nothing before or since then but complain and I’m willing to bet he was complaining then. If he was not smart enough to realize that he had no shot of winning, I think his waste of his money in that endeavor was stupid.

            If you or he are unsure of how to file a complaint, I will show you how to do that when I file one with the FEC for his failure to report and keep the public aware of the status of his loans. He is accountable to the public. There was a report due 12/31/09 and it’s not on the FEC website. If it’s been sent in, then I don’t need to file.

            This guy, complaining about candidates and loans, is almost like the pot calling the kettle black.

            He has ran for office ONCE and other than complaining on this blog and on his own, I don’t see him doing anything. IMO, he paid 90K to have a soap box to stand on and complain. If over 90% of your funds are you own, there’s a problem.

            He can challenge me on issues all he likes and I will debate. However, I will not allow lies to go out about me without calling them as such.

          • GOPGeorgia says:

            Icarus,

            Here are two questions to test your fairness. Earlier in this thread, I posted a resolution on ethics that I presented to the state GOP EC that was passed unanimously.

            Do you think it’s fair for Konop to call me unethical and you say nothing about it? (assuming you weigh in at all.) Do you think it’s wrong to point out when someone is lying about you (repeatedly) ?

          • John Konop says:

            GOPGeorgia,

            The truth is I have spent my own money fighting many issues even after I ran for office especially in the areas or education and economics. Instead of attacking me personally, why not deal with issues I brought up? Also as a party leader you do not have to defend and or condone obvious bad ethical behavior.

            1) Was I wrong when I ran for office years ago and warned about the economy being over leveraged?

            2) Was I wrong when I warned this would be put on tax payers footsteps because of the government backing the lending, deposits…..

            3) Was I wrong when I warned that Kathy Cox math 123 would be a failure?

            4) Was I wrong when I warned that the Kathy Cox, No Child Left Behind college bound 1 track and you are out education concept would not work?

            I could go on and on about other issues but I am sure you get the concept. It is never easy telling people information they do not want to hear. And you are right I did this to have a small voice because I felt strong that the above would play out the way it did.

            And the reason I have access to people on both sides is because they know I am about issues not a party. And they know putting politics aside it is hard to argue I did not know what I was talking about.

          • GOPGeorgia says:

            JK,

            You need to go back and read this thread again. I didn’t mention you personally until you mentioned me personally. You attack first. Every time. I’ve seen threads that I wasn’t even posting in and you start lying about me by assuming you know how I feel on a subject, for no apparent reason. February 4, 2010 at 8:23 am was the time you started tying to characterize what I think and how I feel. You got off of issues and started trying to make it personal, so don’t blame me when I have to correct you.

            I will agree that you care about issues. Sometimes you are dead right on them and sometimes you are dead wrong. Your bigger problem is that you assume you know what others (including myself) have to say about a situation.

            I don’t care to hear from the prophet of doom with dire warnings engraved in stone tablets. It’s boring and annoying. It doesn’t matter if your right on issues if you tick people off in the process. When I want to weigh in on an issue, I will. That doesn’t mean I am your permanent debate partner. If I don’t feel like talking about an issue that you want to talk about, you’ll have to learn to live with that.

            If you think someone has broken the law, call the police, the FBI, the state ethics commission, or whatever department is appropriate. Whining to me won’t accomplish anything for you. If whatever the situation you are talking about at the moment is so obviously bad, do something about it, MORE THAN JUST TALK ABOUT IT.

          • John Konop says:

            GOPGeorgia,

            Nice spin but I have proposed and work on solutions for education and the economy. You may not like the fact some of my solutions expose candidates you spin for, like Kathy Cox….but many on both sides are working on the solutions.

            I am focused on solving issues not party politics. I have a lot of respect for leaders like Chip Rogers, Sean Jerguson, Calvin Hill…. who backed Roger Hines over Kathy Cox knowing this was best for our state over covering for the party.

            And on the above issue of education Fran Millar and Steve Davis as well have put party politics aside and are working on real solutions. And this is type of leadership we need from both sides, not pretend we do not have a problem and or cover it up.

          • ByteMe says:

            If it’s any consolation, John, I was one of the 17% who voted for you, because I know Tom Price is another politician who puts party before the people he’s supposed to represent. Just so you know.

          • John Konop says:

            ByteMe,

            That was nice of you to tell me that. Truthfully I am just thankful for having a small voice. And many politicos were shocked I got close to 30% of the vote in Cherokee county being out spent 20 to 1 and having no name recognition via never being in politics.

            As I have told you in the past, I may not always agree with you but I truly think you also look at what is best for our country over any party! And we need more people like you having their voices heard!

  9. B Balz says:

    John and Doug:

    Feisty, impassioned dialogue is good and I for one feel that both of you ought to maintain your positions without giving much up.

    To me the larger issue, Party politics over practical solutions to important issues is probably as old as our ability to communicate with each other. Depending on what one believes, anywhere from about 6,000 years to 3.4 million years…

    Doug kindly spent about an hour with me discussing his personal views on a touchy subject, (Embryonic Stem Cell Research) and I came away from the discussion with a healthy respect for his point of view. As well, I feel my points were heard and understood by a GOP leader in the 9th.

    John and I discussed overarching macro-economic views one day, and again, I came away from that discussion with a clearer knowledge of the perils we face as a debtor Nation. Folks, whether it torques you off to hear gloom and doom or not, economics is indeed called ‘the dismal science’ with good reason.

    I too, cross referenced a thread with a previous discussion involving a heated exchange between myself and Doug. In all honesty, I did it to bring attention to the issue, knowing Doug would react to it. That was goading behaviour, and to Doug’s point, it ought not be tolerated in an intelligent forum.

    I am not suggesting John or Doug engaged in goading behavior. I am admitting that I did. As I spoke to Doug, I heard and agreed that goading another person is not the best way to present a point of view.

    It might be good for the owners of Peach Pundit to establish a written set of ground rules that encourage civility to promote efficient discourse. Lately, threadjacking is being discouraged more openly, perhaps goading, name calling,etc. might be included in that effort.

    On the other hand, controversy raises awareness and page views…

    • GOPGeorgia says:

      B Balz,

      I agree with much of what you have had to say. My stated policy is not to allow others (specifically JK) to mischaracterize what I think, how I feel, or to tell blatant lies about me. I only call JK a liar when he lies about ME. If he could refrain from that, we could talk about issues more.

      If you let someone tell lies about you enough, eventually others will start to think it’s the truth because it wasn’t refuted.

    • Thanks, B Balz, I don’t think it could have been said better. Well done!

      I have disagreed with Doug and John about various things and respect both of them. Personal attacks, both implied and overt, damage the attacker more than the attacked.

      Good guys need to find a way to disagree amiably and make their points. I’m pretty sure it can be done. After all Jefferson and Adams eventually developed mutual respect and apparently friendship.

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