D.C. Council chairmanship race has Kwame Brown explaining old fundraising reports use

By Ann E. Marimow
Wednesday, September 1, 2010; B05

The District's campaign finance watchdogs are looking into irregularities in D.C. Council member Kwame R. Brown's fundraising reports from two previous elections.

The review by the Office of Campaign Finance, made public Tuesday, comes as former council member Vincent Orange -- Brown's rival in the Sept. 14 Democratic primary to succeed council Chairman Vincent C. Gray (D) -- is calling for a formal investigation into what he says are troubling inaccuracies in Brown's reporting.

In a pair of letters Monday addressed to officials with Brown's campaigns, the Office of Campaign Finance sought information about why Brown (D-At Large) was raising money for and making payments from a 2008 account this spring, two years after the election, and why a separate account he controls from his 2004 campaign owed money to the Internal Revenue Service.

Reports filed in July for the 2008 account show Brown fundraising and making payments in 2010 for expenses related to printing, consultants, an office alarm system and a credit-card machine. Rules require candidates to close out debt-free accounts six months after an election and to contribute any surplus to nonprofit groups or political parties.

Orange, an accountant, held a news conference Tuesday outside the city's campaign finance office on 14th Street NW to call attention to Brown's reports, displaying the numbers on a series of oversize poster boards.

"There's something amiss here," said Orange, who left the council in 2006 after two terms to run for mayor. "Where is the money?"

Brown downplayed Orange's assertions, saying: "Mr. Orange has tried to be Mr. Super CPA and tried to find something that doesn't look right. This issue is a nonissue." He called the move "just desperate, to try to get some traction with voters."

Accounting errors cited

Brown formally responded within hours to finance officials' request, blaming the confusion on accounting mistakes and saying that the campaign had found the problem and discussed it with the office. The campaign incorrectly reported a surplus in the 2008 account, Brown's treasurer wrote in response. With outstanding debts and bills, the letter said, the campaign could legally keep open the account, raise money and pay bills.

Concerning the 2004 account, Brown's treasurer wrote that the campaign's previous accountant incorrectly reported taxable income to the IRS as if the campaign account were a business. The accountant died before he could resolve the issue, according to the letter.

Brown said in an interview that he reported and paid the unresolved $13,800 tax claim last month although he is continuing to seek reimbursement because he does not believe that the committee owed taxes.

Federal law prohibits the IRS from commenting on individual cases. In general, a campaign committee with political activity that is limited to collecting contributions and making expenditures would not be required to pay income tax.

Requests for information from the District's Office of Campaign Finance are not the equivalent of a full-blown investigation. They are issued when officials come across questionable line items in reports. In general, spokesman Wesley Williams said, campaign finance officials do not usually come across accounts that owe money to the IRS.

"I'm not going to say it's never happened, but it's not the norm."

Old vendor bills

In his news conference Tuesday, Orange also questioned Brown's 2010 payments to campaign vendors from the 2008 account. Brown said the payments were appropriate because they covered expenses from his last campaign.

In that contest, Brown said he hired Banner Consulting Services of Upper Marlboro to handle a range of campaign responsibilities. When the company went out of business, he said, the campaign had to settle with its subcontractors. Brown said that it took some time to collect and verify invoices but that the vendors have been paid. The campaign is prepared to close out the 2008 account and has requested a meeting for Friday to start the process, Brown's treasurer said in her letter.

In the final two weeks of the campaign, a new Washington Post poll released this week showed Orange trailing Brown by double digits among likely Democratic voters. Brown has the backing of all but one of his council colleagues and a long list of endorsements from major labor, business and community organizations.

Orange sought to use questions about Brown's campaign accounts Tuesday to revive earlier reports of his opponent's personal financial troubles and to challenge Brown's fitness to oversee the city's budget.

Brown has been sued for nonpayment by three credit-card companies and estimates that his personal debt totals $700,000, which includes the mortgage on his Hillcrest home.

"If you can't handle your personal finances and you can't handle your campaign finances, how can you handle a $10 billion budget?" Orange asked.

In response, Brown pointed to his endorsements from the business community and his work as chairman of the council's economic development committee and said his personal affairs would not affect his work.

"It's important for me to run a positive campaign instead of getting in the mud with VO," he said, using his rival's nickname.

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