Given any money to Herman Cain lately? There’s a decent chance some of it went directly into the coffers of a for-profit company Cain runs.
A review of Cain’s last two FEC reports shows the campaign transferring just over $100,000 in cash to Herman Cain T.H.E. New Voice, a company that promotes Cain’s books and political philosophy.
In the Federal Election Commission (FEC) report his campaign filed in July, Cain’s team reported sending $50,831.35 to T.H.E. New Voice. The expenditures listed included “booklets” and “books” (presumably copies of the handful of short pamphlet-like books available for sale at THE New Voice website along with Cain’s new full-length book, This Is Herman Cain!, published by a division of Simon and Schuster), along with items such as “overnight”, “lodging”, “ground transportation” and “air fare.”
Around the time the campaign filed its latest FEC report which was due Oct. 15, the campaign revised its old report and listed two expenses that went to THE New Voice: $36,511.20 for “books” and a separate $50,011.35 expense listed as “See Below,” indicating the money went to “books” as well. An amended report is meant to replace an original report, meaning the money the campaign first said they spent on “overnight”, “lodging”, “ground transportation” and “air fare,” is now simply listed as “books.”
In Cain’s Oct. 15 report — the latest from the surging Republican — the campaign listed $14,425.91 more going to THE New Voice for “event supplies.”
So, all told, a lot of money is going to Cain’s company. What for, exactly? We don’t know. Representatives from Cain’s campaign wouldn’t respond to multiple requests for comment on the reports. At deadline, the campaign said it was “looking into” our questions about their reports.
Experts TPM talked to Monday said the numbers raised questions — and eyebrows.
Campaign finance veterans said they couldn’t think of any other instances of major presidential candidates having their campaigns pay their companies. On the congressional level, it’s not all that uncommon to have candidates paying their own companies, though it often raises questions in the media.
“I can’t think of any major party candidate that has been reimbursing his business or himself, but it’s pretty common at the congressional level,” Meredith McGehee of the Campaign Legal Center told TPM. “I would be surprised to see it at the presidential level and amongst the top tier candidates.”
Giving campaign money to your own company raises a few thorny issues: if you overpay then you’re basically ripping off your donors and personally profiting from your political campaign; if you underpay then its like an in-kind contribution. That’s why high-profile candidates typically avoid the issue altogether by going to another vendor.
“The FEC has frequently expressed that it will provide wide latitude for candidates when it comes to campaign spending,” said Craig Holman, a government affairs lobbyist for Public Citizen. “But such spending for goods and services from a personal business cannot be less than market value, or it would constitute an illegal corporate contributions, and it cannot be above market value, or it would indicate converting campaign funds for personal use.”
“Nevertheless, no serious presidential candidate will wade into these murky waters,” Holman continued. “Presidential campaigns involve more money, frequently using public funds, and presidential candidates are held to a higher bar. The appearance that a presidential candidate may be personally benefiting from the campaign, particularly if public funds are at stake, can be potent fodder for the campaign’s opponents.”
Holman pointed to the criticism of Vice President Joe Biden for renting his property to his Secret Service protection, even though his action isn’t campaign related.
“Any presidential candidate that pays his or her own company for goods and services is going to be viewed by the public as using the campaign for personal profit,” Holman told TPM.
While it isn’t quite as uncommon for a presidential candidate to purchase copies of his own book, the transparency advocates at the Sunlight Foundation said Cain should say whether he’s making any profit off the transactions between his presidential campaign and THE New Voice.
“It’s not unusual for a candidate to write a book. What’s unique here is usually the candidate doesn’t own a company that’s promoting the book,” said Bill Allison, editorial director at Sunlight. “You can assume a publisher like Random House would operate at an arm’s length from [any candidate authors in their portfolio]. The question is can a company Herman Cain owns keep him at arm’s length.”
The FEC actually weighed in on the relationship between campaigns and book tours in a February advisory opinion issued at the request of Sen. Scott Brown (R-MA). In a 4-2 ruling they found that the use of campaign funds to “purchase copies of the book from the book’s publisher at the fair market price, and to have the publisher donate to charity Senator Brown’s royalties from sales of the book to the Committee, is permissible.”
Overall, Cain’s campaign remains one of the least flush in the race. He raised just $2.6 million in the third quarter — a far cry from the tens of millions he faces in the coffers of his GOP opponents — and he’s lent his campaign $675,000 of his own money to keep things rolling on the trail.
Meanwhile, Cain has found himself facing scrutiny over his lack of transparency. There’s still his refusal to name any advisers beyond the banker behind 9-9-9. Cain says fundraising is starting to pick up now that he’s in the spotlight, but donors might become wary if they think their money is going to something other than helping him win the Republican nomination.