After a six-month review of Brown’s bank statements and receipts, the audit concluded that he had failed to account for 221 contributions, plus other revenue, totaling $133,701. The campaign also never reported 53 expenditures totaling $169,431, according to the report.
Despite a District law barring campaigns from using cash for purchases of $50 or more, the audit found that Brown’s committee issued eight checks totaling $31,590.70 that were made out to cash. Auditors were initially unable to determine how the money was spent, but Brown’s election committee provided documentation two weeks ago that showed that the cash was spent on campaign-related purchases.
“We have determined that the reports, statements and responses filed by the Committee to Re-Elect Kwame R. Brown are not in substantial compliance with the District of Columbia Campaign Finance Reform and Conflict of Interest Act,” the report concludes.
In an interview Tuesday, Brown apologized for what he deemed “administrative errors” but stressed that there is “no missing money.”
“We always had every receipt and every check,” said Brown, who gave up his at-large seat after he was elected council chairman last year. “It was just errors in getting it in the [Office of Campaign Finance] system the right way.”
According to documentation released by Brown on Tuesday, more than than $50,000 of the previously unreported expenses went to Banner Consulting, a firm run by Charles D. Hawkins, who served as Brown’s treasurer during his 2004 campaign.
In all, Brown paid Banner Consulting $379,654. After auditors discovered that the campaign had failed to “substantiate the amounts and regularity of the payments” to Banner Consulting, the Office of Campaign Finance requested all of the firm’s bank records.
According to the report, the records revealed that Banner had been forwarding a large chunk of the money to a company called Partners in Learning for consulting services in support of Brown’s campaign. Partners in Learning, a sales-coaching firm, was owned and operated by Brown’s brother, Che Brown.
Che Brown’s firm received $239,663 through its subcontracting agreement with Banner Consulting, even though Kwame Brown never initially reported those expenditures publicly. The payments to Che Brown’s firm account for about 30 percent of the $824,000 that Kwame Brown raised for a 2008 race in which he faced minimal opposition.
“It was . . . noted that the payments and/or transfers made by the Committee to Re-Elect Kwame R. Brown to Banner Consulting were paid and/or transferred to Partners in Learning on the same dates or in close proximity,” the audit states.
Che Brown declined to comment on why his firm’s money was routed through Banner. But he said he used it to pay for Kwame Brown’s aggressive field and get-out-the vote efforts.
“You name it, with my father, it’s the guts of what Kwame does on the campaign,” said Che Brown, referring to Marshall Brown, a longtime D.C. political strategist. “I am pleased with the work that we did. I am pleased with the tireless work of the campaign.”
In an interview, Banner’s Hawkins said he and Che Brown decided to set up companies to do work for Kwame Brown’s 2008 reelection campaign because they “worked well together” during the council member’s 2004 race.
“I have worked with the Brown family and have known the Brown family since 1967, and we all worked well together,” Hawkins said. “There is nothing to hide.”
When asked why Kwame Brown didn’t report the payments to Che Brown’s firm, Hawkins said, “Primary contractors use subcontractors all the time.”
“It’s not an unusual business relationship,” added Hawkins, saying he was “sure” Kwame Brown knew of the arrangement.
Kwame Brown, who noted that he’s been cooperating fully with auditors, said Banner partnered with his brother’s firm because it needed more expertise in running a top-notch get-out-the-vote effort.
“It wasn’t trying to be hidden,” Brown said. “We initially went with Banner . . . but in terms of what we were trying to accomplish field-wise, they couldn’t make it happen, and they decided to subcontract.”
According to the audit, Hawkins and Che Brown signed their partnership agreement June 1, 2007, more than a year before Brown’s reelection.
The audit also noted that a “profit and loss” statement supplied by Partners in Learning used $169,164 of Brown’s money to pay for “day labor” expenses. An additional $5,621 was spent on fuel, office supplies, and telephone and fax services, the report says.
But the report concluded that Partners in Learning was unable to provide documentation, meaning auditors could not “fairly represent the financial activity as indicated in the Profit and Loss statement provided” by the firm.
Council member Jim Graham (D-Ward 1) said the chairman needs to quickly produce an “itemized report” for what Che Brown spent the campaign funds on.
“If he can’t provide one, then people are going to have to reach their own conclusions about what happened, and an investigation would be a subsequent step,” Graham said.
Kwame Brown told The Washington Post that the “day labor expenses” went to pay people who were “out knocking on doors, putting up signs and helping out in the field.”
In other findings, the audit discovered that Brown initially failed to account for $12,567 in revenue the campaign received through PayPal, cash or bank credits. The audit also revealed $5,834 in “irreconcilable” differences in reported expenditures vs. bank expenditures. The report found a total of $202,968 in disbursements that were not correctly recorded, including the 53 expenditures totaling $169,431.
“The audit staff surmised that this amount is a result of the bank debit corrections,” the report states. “However, without copies of the original committee deposit slips, the audit staff was unable to identify each deposit.”
Kwame Brown said he takes “full responsibility” for the problems associated with his campaign, adding that he will rely on a “professional firm” to handle his bookkeeping, instead of volunteers, from now on.
“We now know, when you get to a certain level, you can’t have a volunteer doing it,” Brown said.
Staff writer Mike DeBonis contributed to this report.