The Influence Industry: FEC came close to finding against Buchanan in straw donor case

December 21, 2011

Federal Election Commission investigators came “close to supporting a finding” that Rep. Vern Buchanan (R-Fla.) violated laws forbidding reimbursement of campaign contributions in 2006 and 2008, but the agency pulled back amid concerns over the credibility of a key witness, according to documents.

The FEC general counsel’s office also said that Buchanan’s “lack of recall” about an affidavit in the case “does not seem credible” and found that other parts of his testimony were “internally inconsistent.”

Deputy editor, National politics View Archive

The January 2011 counsel’s report and other documents were released to parties in the case this week and obtained by The Washington Post. The records shed new light on the murky circumstances surrounding campaign-finance allegations against Buchanan, who leads Republican fundraising efforts in the House and is under investigation by the Justice Department and the Office of Congressional Ethics.

Both sides in the FEC case agree that employees of three car dealerships controlled by Buchanan were unlawfully reimbursed for more than $90,000 in contributions to his campaign committee, Vern Buchanan for Congress. Federal election laws forbid using “straw donors” to evade contribution limits.

But Buchanan and his lawyers say that the Florida Republican was not aware of the reimbursements and never instructed employees to carry them out. The FEC concluded there was not enough evidence to move forward with a case against him, leading Buchanan’s campaign to declare earlier this year that he had been “exonerated.”


Republican Vern Buchanan talks to the media outside the Sarasota County Supervisor of Elections office. (STEVE NESIUS/ASSOCIATED PRESS)

In a newly released legal brief filed in October 2010, defense lawyer William J. McGinley of Patton Boggs accused the counsel’s office of “overstatement,” “distortion” and “speculation” and said the agency relied on “one unreliable witness and his relative” to build a case.

“The report released today shows that after a two-year, exhaustive investigation the FEC rightly concluded in a bipartisan manner that Congressman Buchanan and the campaign engaged in no wrongdoing,” McGinley said in a statement Wednesday.

The allegations outlined in the counsel’s report center on three Florida dealerships partly owned by Buchanan during his initial run for Congress in 2006 and his reelection bid in 2008: Hyundai of North Jacksonville, Venice Nissan and SunCoast Ford.

The FEC filed a lawsuit against one of Buchanan’s former business partners, Sam Karzan, for reimbursing $68,000 in contributions from employees at the now-defunct Hyundai dealership.

Karzan said that Buchanan instructed him to make the reimbursements, but the FEC counsel had “concerns about Karzan’s credibility” and did not find enough direct evidence to corroborate his charges, records show.

The agency also reached settlement agreements with three other former Buchanan associates for reimbursing more than $23,000 in contributions at the other two dealerships in 2005 and 2007, according to the documents.

The FEC counsel’s office said evidence showed that “Buchanan and his associates pressured his minor partners to raise contributions, especially toward the end of quarterly reporting periods, that Buchanan’s campaign tracked these contributions, and that Buchanan was more involved in these activities than he was willing to admit during his deposition.”

The counsel’s report also cites a former finance executive at one Buchanan-owned company, who testified that Buchanan asked him to help reimburse a business partner for a political contribution in 2003. When the executive said that would be illegal, Buchanan told him to “finesse it,” according to testimony.

Buchanan denies the allegation and says in legal documents that the former executive appeared to have “continued animosity” toward him.

Rep. Pete Sessions (R-Tex.), chairman of the National Republican Congressional Committee, told Bloomberg News earlier this week that he has “confidence” in Buchanan, who serves as finance chairman of the group.

“Vern Buchanan has been forthright and brought the information to the committee and to the Department of Justice himself,” Sessions said, referring to the criminal and ethics investigations.

But Jesse Ferguson, spokesman for the Democratic Congressional Campaign Committee, said: “When your finance chairman is under criminal investigation for campaign finance schemes, every dollar you raise is suspect.”

RNC in the black

The Republican National Committee has more money in the bank than it owes to creditors for the first time in more than a year.

The committee, which has struggled financially over the past year, raised $7.2 million last month, leaving it with $14.1 million in the bank and $13.4 million in debt, according to a disclosure report filed this week.

The RNC outpaced the Democratic National Committee, which raised $6.7 million last month. That’s all the more noteworthy since the DNC benefited from $2.8 million raised by President Obama. The DNC had $10.5 million in the bank and $7.8 million in debt.

“Heading into 2012, the RNC will be operating from a position of significant fiscal strength,” Chairman Reince Priebus said in a written statement.

Staff writer T.W. Farnam contributed to this column.

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