Senate Majority Leader Bill Frist, a man who clearly wants to be president, has not exactly proven himself a wise money manager. I’m not referring to his votes for reckless tax cuts and massive budget deficits; I mean his handling of his own accounts.
We learned in December, for example, that Frist’s campaign committee suffered big losses (more than $524,000) in the stock market and ultimately came up short of money needed to cover a bank loan that was due in August. Frist’s filings showed he had paid a little more than $10,000 on a $360,000 loan from U.S. Bank. (Oddly, Frist, who believes Social Security should be replaced with private accounts, lose over a half-million dollars when the stock market was going up.)
Expanding greatly on what was reported late last year, the Atlanta Journal-Constitution ran a report over the weekend pointing to more embarrassing details for Frist, including signs of fiscal mismanagement and possible violating of campaign finance laws (via TruthOut).
Frist began focusing on raising record amounts of cash for other Republicans [in mid 2000]. But while he was picking up political IOUs that could aid him greatly in a run for president in 2008, his own campaign finances took a sharp, and in some ways baffling, turn for the worse.
Hundreds of thousands of dollars Frist’s supporters had given him to run for the Senate were dwindling at a rapid rate. Much of that money was lost in a stock market investment that experts say was out of line with the way candidates traditionally invest campaign funds. Frist’s campaign also took on more than $1 million in debt so that it could repay Frist for interest-free loans he made to his campaign six years earlier.
And then, in a decision experts say violated federal campaign regulations, Frist filed reports with the Federal Elections Commission that made it difficult for his contributors and political foes to determine just how bad off his campaign finances were.
Frist’s aides, who have given contradictory responses to questions about Frist’s finances, deny any wrongdoing.
The AJC points to a series of decisions that come together to point a disturbing picture for Frist.
* In June 2000, took $1 million out of the bank, where it was earning interest, and invested it. Though Frist’s aides refused to say where the money went, it quickly lost hundreds of thousands of dollars.
* A few months later, in November 2000, Frist wanted to recoup the $1.2 million he lent his campaign in 1994, but with just over $1 million available, he didn’t have the cash on hand. If he paid himself back, his campaign wouldn’t have anything left. So his campaign took out a $1.44 million bank loan, which he used to reimburse himself. The debt on that loan was hidden to make Frist 2000 look like it had plenty of money.
* Which led to decision #3. Frist didn’t report the new debt to the Federal Elections Commission, as required by law. Instead, he told the FEC the new loan was held by another committee he controlled (the one he formed in 1994, but which was dormant by 2000).
Why did Frist report $1.44 million debt under the name of an old committee rather than his current campaign operation?
“Looking at this, it appears they did not want to show that Frist 2000 was the actual borrower of the $1.44 million,” said Larry Nobel, who worked 23 years at the FEC, 13 as the agency’s general counsel.
Nobel was one of two former FEC officials who reviewed Frist’s FEC and loan documents at the request of The Atlanta Journal-Constitution.
“It appears to me to be misreporting. They misreported who the actual borrower was. Misreporting is illegal,” said Nobel, now executive director of the Center for Responsive Politics, a nonpartisan campaign finance watchdog group. “The question is whether the FEC would do anything about it.”
The whole thing is bizarre — and rather incriminating. It certainly doesn’t help that Linus Catignani, Frist’s longtime finance director, initially argued the loan was needed to pay operating expenses after the stock market investment soured, and then later argued the loan was needed to help repay Frist.
Why did Frist put all that money into one risky account in the summer of 2000? Why did his campaign try and hide a huge loan? Why are his staffers offering contradictory explanations? Why did he file incomplete and inaccurate campaign disclosure forms?
Another day, another high-profile GOP scandal to watch….