Does Herman Cain Also Have A Campaign Finance Problem?

Another potential problem for the Cain campaign.

On top of the story that Politico broke last night, the Milwaukee Journal-Sentinal is out today with what could be a violation of campaign finance laws in the form of in-kind contributions from a private company:

Herman Cain’s two top campaign aides ran a private Wisconsin-based corporation that helped the GOP presidential candidate get his fledgling campaign off the ground by originally footing the bill for tens of thousands of dollars in expenses for such items as iPads, chartered flights and travel to Iowa and Las Vegas – something that might breach federal tax and campaign law, according to sources and documents.

Internal financial records obtained by No Quarter show that Prosperity USA said it was owed about $40,000 by the Cain campaign for a variety of items in February and March. Cain began taking donations for his presidential bid on Jan. 1.

Prosperity USA was owned and run by Wisconsin political operatives Mark Block and Linda Hansen, Cain’s current chief of staff and deputy chief of staff, respectively.

The authenticity of the records was verified by two individuals close to the firm.

It is not known if Cain’s election fund eventually paid back Prosperity USA, which now appears defunct. The candidate’s federal election filings make no mention of the debt, and the figures in the documents don’t match payments made by the candidate’s campaign.

In addition to picking up these expenses at least initially, Prosperity USA also paid as much as $100,000 to the Congress of Racial Equality, a conservative black organization, shortly before Cain was a featured speaker at the group’s annual Martin Luther King Jr. dinner in mid-January.

Cain, who has surged to a top-tier presidential candidate in the past month, apparently was not paid for the appearance. The personal financial disclosure forms for the former CEO of Godfather’s Pizza list no honorariums for speeches.

Election law experts say the transactions raise a host of questions for the private organization, which billed itself as a tax-exempt nonprofit, and the Cain team.

“If the records accurately reflect what occurred, this is way out of bounds,” said a Washington, D.C.-based election lawyer who advises many Republican candidates and conservative groups on campaign issues. The lawyer asked not to be identified because of those affiliations.

Michael Maistelman, a Wisconsin campaign attorney, agreed.

“The number of questionable and possibly illegal transactions conducted on behalf of Herman Cain is staggering,” said Maistelman, a Democrat who has represented politicians from both parties on campaign issues.

Block and Hansen have not returned numerous calls in recent days.

There are potentially two problems here. One involves the FEC regulatory and legal violations inherent in receiving this kind of in-kind contribution from a corporation of any kind. Even after Citizens United, it is not legal for a corporation to simply give tens of thousands of dollars to a political candidate, or to make an in-kind contribution of the kind that this entity apparently did. The second legal problem is between the IRS and Block/Hansen. Since Prosperty USA is a non-profit tax exempt entity, the tax code forbids it from making any contributions of any kind, in any amount, to a political campaign. It’s also worth noting that Block, now known as The Cigarette Smoking Man on YouTube, has a history of doing things like this:

According to a report by The Associated Press, Herman Cain’s chief of staff Mark Block — the man America came to know from his appearance smoking a cigarette in the presidential candidate’s viral Web ad — has a troubled past that includes arrests for drunken driving and a suspension from campaigning in Wisconsin after accusations of breaking election rules.

In 1997, Block was accused of coordinating campaign activities between a state supreme court justice’s reelection campaign and a special-interest group that promoted school vouchers, in violation of campaign laws. Four years later, Block agreed to a settlement that included a $15,000 fine and a 3-year suspension from running campaigns in the state, but did not require him to admit guilt.

Ed Morrissey suggests that this mess, which is exactly what this is, can be attributed mostly to the inexperience on the part of Team Cain when it comes to things like this. Perhaps that’s true, although I’ve got to say that Block’s involvement in all of this does raise an eyebrow at the very least, but that just adds yet another piece of evidence to the question of how seriously Cain has been viewing this campaign. When you’re running for a Federal office, whether it’s Congress, the Senate, or the Presidency, the most important people you need to hire are a campaign manager, a communications director, and an attorney well-versed in campaign finance laws. If you think you’re going to learn something that complicated on the fly, you’re going to end up making mistakes even if there’s no nefarious intent involved.

Will anything come from this? It’s hard to tell. The Federal Election Commission won’t get involved typically unless a complaint is filed alleging a violation of a law or regulation. Even then, unless it’s a serious violation on the level of what John Edwards is alleged to have done, the typical result of an investigation is either a determination of no wrongdoing, or a fine. The IRS is a different story, of course, but that really depends on what Prosperity USA’s tax returns say and could take years to develop. This story isn’t nearly as sexy as the Politico story, so it’s unlikely to get the same amount of coverage. In terms of the law, however, it strikes me as being far more serious.

FILED UNDER: Campaign 2012, US Politics,
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. legion says:

    The harassment allegations I’m willing to completely not care about until a lot more support comes to light, but this seems much more potentially damaging and plausible. As noted, this is likely due to inexperience, also coupled with (IMHO) the sort of “just get it done” attitude common (and generally lauded) in CEO-Politicians.




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  2. OzarkHillbilly says:

    Mitt’s miners are digging up some real gold this year.




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  3. SKI says:
  4. Neil Hudelson says:

    @SKI:

    Perry would make more sense, as Cain is more of a rival to Perry than to Romney.

    …can be attributed mostly to the inexperience on the part of Team Cain when it comes to things like this.

    The laws and regulations when it comes to donations from corporations (of any kind) to a political campaign are fairly complicated, and have only gotten more so since Citizens United (that is–while eventually it will be easier, experienced treasurers and counselors are having to relearn a bit about what is and is not allowed).

    That said, the barring of donations from a 501(c)3 to a political campaign is Campaign Finance 101. Every campaigner, from the most experience manager to the newly hired Field Organizer understands and knows this. I’m not buying the “inexperience” excuse on this one.




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  5. jan says:

    @SKI:

    The best thing about your link, SKI, is that it included a photo of Mr and Mrs Cain. For the longest time I wondered if Cain was single, until I found on a Wikipedia bio that there was a wife named Gloria hanging around for over 40 years! I find it odd that a potential FLOTUS would be so absent from her husband’s events.

    As for the sexual harassment charge, it seems like one of those reaches into the mud, for the sole purpose of taking someone down. There are so many other aspects about Cain to voice concern over, making this two decade old story seem more of a distraction than something to be taken seriously. Also, while such a story could be traced to Cain’s republican opponents, it’s also well within the scope of character assassination that is often strategically contrived by democrats towards people with R’s by their names.




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  6. OzarkHillbilly says:

    @SKI:

    Ski: “Mitt’s Miners” sounded so much better than “Perry’s Pain”…. The Oppo research is so obvious here, and the fact that Obama doesn’t have to do a thing is also obvious.

    Those of us on the left can just sit back and enjoy. (yeah… our turn is coming)




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  7. jan says:

    @OzarkHillbilly:

    yeah… our turn is coming

    Maybe…and, maybe not.




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  8. Tammy says:

    YAAAAAAY… Love these stories… Herman will be raising several more million this week… keep the attacks coming, he’ll be catching up in funds very shortly 😀




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  9. B Lowry says:

    You people are despicable…is there nothing you wont stoop too?? One baseless smear doesnt work so you try another…then another….then another. I hope Herman Cain puts together a legal fund to sue the shit out of all you slime bags. Is this what America has sunk to?….do you have any sense of decency? America no longer believes the media because of this type of SO CALLED reporting….makes you want to puke!! Luckily fewer and fewer people are buying your vomit!




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