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August 14, 2009 05:42 PM UTC

Would McInnis' Campaign Funds Charity Have Been Illegal?

  • 39 Comments
  • by: Colorado Pols

UPDATE: This little nugget from the Rocky Mountain News in 2004, dug up by a community member, would seem to belie McInnis’ claim that he couldn’t legally do what he promised:

Retiring Rep. Scott McInnis (R-03) plans to use part of his $1.3M campaign war chest to start his own charitable foundation — a rare but legal maneuver that watchdog groups have criticized in the past.” According to McInnis CoS Mike Hesse the foundation would work on issues McInnis focused on in Congress, including breast cancer research, education and conservation. The rest of the money would be available for political donations.

FEC guidelines permit the transfer as long as the funds are not converted for personal use. [Pols emphasis] It prohibits candidates from being paid from the groups they donate funds to, although that stipulation ends once the charity has spen[t] the original amount donated.

UPDATE #2: It would appear that a portion of today’s editorial in the Denver Post is in need of some revision:

Before McInnis left Congress in 2004, his chief of staff said the congressman wanted to use part of his remaining $1.3 million campaign fund to seed a charity that would help fund cancer research.

It was a noble idea that later ran aground, McInnis said, over legal ramifications.

McInnis has been wrongly attacked by some progressive activists who want to damage his candidacy on this issue. The former congressman’s answers in Fender’s story were plausible.

As it turns out, not so much! Original post follows.

—

Another point in this week’s stories about gubernatorial candidate Scott McInnis’ leftover campaign funds we think merits some additional clarification. Revisiting the Denver Post’s original article Wednesday:

“This is the first time I’ve ever heard of someone being criticized for giving something to charity,” McInnis said. “We had some ideas (for a nonprofit) that, after they were vetted by election lawyers, we were told we couldn’t do.”

As we’re always quick to note, we’re not and never represent ourselves to be experts on election law, particularly at the federal level. But we have questions about the veracity of McInnis’ claim that he could not legally have established a charity with his leftover campaign funds. We’ve not heard of such a restriction before, and many people have donated these funds to charitable causes after their careers were over–ex-Rep. Marilyn Musgrave even donated her surplus funds to a charity directly affiliated with her present employer, a contribution that was deemed entirely above-board despite the questions it invited.

With that, we’ll turn this over to our astute readers, and it wouldn’t be the first time our resident experts have settled a vexing question: would what McInnis proposed to do with his leftover campaign funds in 2004 have been illegal as he has repeatedly claimed this week, or not?

Because if the answer is “it’s not,” McInnis has yet another credibility problem that didn’t exist when the original story ran. You can complain all you want about liberals targeting you for ‘smear,’ but you can’t really blame them if your defense against the ‘smear’ is itself bogus.

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39 thoughts on “Would McInnis’ Campaign Funds Charity Have Been Illegal?”

  1. Scott McInnis went back on his word?  Wow.  Who would have seen that one coming?  

    Maybe the people he promised to serve only 3 terms in Congress to.  

    Or maybe the people he promised to remain 100% pro-choice to when he ran for Congress the first time.  

    This guy is not only a liar, he’s a crazy liar.  Task one for Duffy and Hesse is to keep him on his meds.  Good luck with that.  

  2. saying he couldn’t do it. The only way he couldn’t move the money into a charity was if he or his immediate family were going to be drawing a paycheck from said family. Other than that, there really isn’t a huge impediment to putting campaign money into a 501(c)3.

    And if Scott McInnis was in such a rush to find a cure, but the pesky lawyers kept screwing things up, then why not just write  a big check to the Breast Cancer Research Foundation or something along those lines?  

      1. My parish got a new priest, which is why it’s about to become my former parish.  Anyway, Father Newbie informed our parish council that we need to reconsider our annual contribution to the Susan G. Komen foundation because it gives money to Planned Parenthood.  I don’t know, but assume that Komen money goes to breast exams and cancer preventive or treatment services.

        Now, long ago I was a Planned Parenthood patient because they were there and they were cheap and I was a poor student.  I had Pap smears and physicals and breast exams and things like that, and was very grateful that they offered those services.  I never even thought about them in connection with abortions, because that’s not why I was there.  It disgusts me that my church would hold back funding for the Komen foundation because it assists Planned Parenthood in some way that is not connected to abortions.

        Anyway, it may be that McInnis couldn’t write a check to the Breast Cancer Research Foundation because of this “taint.”

  3. If I did not know we were talking about a partner in one of the most respected firms in the United States of America I’d swear these posts were about some half wit.  

  4. That’s what the lawyers must have been harping about.  If McInnis were unable to pay his wife out of the new foundation (i.e. convert to personal use) then it’s no wonder he didn’t keep his word.  

    1. There’s a lot of folks who won’t bother to read an obscure political story on page 6 (much less page 1), BUT who will read the cartoons on the editorial page.

      When they criticize you, that’s OK. When they mock you, you’re in trouble.

        1. There has been one semi-bright spot, when he appeared on Your Show and seemed halfway coherent. Aside from that, it’s been nothing but missteps, scandal and blown opportunities.

          Josh Penry is getting handed this nomination right now. And it’s not from the “kingmakers”.

    2. What a great find, Ardent. That article needs to be reprinted and posted everywhere.

      My Lord, he doesn’t even try to cover up the fact that he was living on the dole for months on end, all provided by supporters’ cash. What a way to make a living. We should all be so lucky to find a way to scam our friends, relatives and constituents.

  8. Under federal law and pertinent FEC regulations, McInnis is permitted to expend money from his campaign account to non-profits.

    Follow the code:

    First, FEC Regulations state that a member of Congress’ campaign acount may be used in the following way:

    In addition to defraying expenses in connection with a campaign for

    federal office, funds in a campaign account or an account described in

    11 CFR 113.3:

    . . .

       (b) May be contributed to any organization described in section

    170(c) of Title 26, of the United States Code;

    — 11 CFR 113.2

    Second, the organization described in section 170(c) Title 26 is:

    (c)  Charitable contribution defined

    For purposes of this section, the term “charitable contribution” means a contribution or gift to or for the use of-

    (1) A State, a possession of the United States, or any political subdivision of any of the foregoing, or the United States or the District of Columbia, but only if the contribution or gift is made for exclusively public purposes.

    (2) A corporation, trust, or community chest, fund, or foundation-

    (A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State, the District of Columbia, or any possession of the United States;

    (B) organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or to foster national or international amateur sports competition (but only if no part of its activities involve the provision of athletic facilities or equipment), or for the prevention of cruelty to children or animals;

    (C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and

    (D) which is not disqualified for tax exemption under section 501 (c)(3) by reason of attempting to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.

    A contribution or gift by a corporation to a trust, chest, fund, or foundation shall be deductible by reason of this paragraph only if it is to be used within the United States or any of its possessions exclusively for purposes specified in subparagraph (B). Rules similar to the rules of section 501 (j) shall apply for purposes of this paragraph.

    (3) A post or organization of war veterans, or an auxiliary unit or society of, or trust or foundation for, any such post or organization-

    (A) organized in the United States or any of its possessions, and

    (B) no part of the net earnings of which inures to the benefit of any private shareholder or individual.

    (4) In the case of a contribution or gift by an individual, a domestic fraternal society, order, or association, operating under the lodge system, but only if such contribution or gift is to be used exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals.

    (5) A cemetery company owned and operated exclusively for the benefit of its members, or any corporation chartered solely for burial purposes as a cemetery corporation and not permitted by its charter to engage in any business not necessarily incident to that purpose, if such company or corporation is not operated for profit and no part of the net earnings of such company or corporation inures to the benefit of any private shareholder or individual.

    For purposes of this section, the term “charitable contribution” also means an amount treated under subsection (g) as paid for the use of an organization described in paragraph (2), (3), or (4).

    –26 USC 170(c)

    Finally, the FEC regulations specifically state that a charitable donation, as defined above, is not for personal use, as long as certain conditions are met.

    (2) Charitable donations. Donations of campaign funds or assets to

    an organization described in section 170(c) of Title 26 of the United

    States Code are not personal use, unless the candidate receives

    compensation from the organization before the organization has expended

    the entire amount donated for purposes unrelated to his or her personal

    benefit.

     

    –11 CFR 113.1(g)(2)

      1. McInnis should have just admitted he messed up, and then proceeded to donate some of his personal fortune to breast cancer. If he had done that, I doubt this would still be a story.

        Instead, he flips his lid on KHOW, blames everyone else in the world besides himself, and ends up looking totally corrupt and coniving.

        Seriously, between Bob Schaffer and Scott McInnis, you could write several volumes on how not to run a political campaign.

        1. so soon after Marilyn Musgrave just moved her campaign’s money into a 501(c)3.

          And the only explanation for the “complexity” McInnis is complaining about is that his lawyers couldn’t find a way around the FEC’s prohibition on directly benefiting from the money transfer.

          Which again begs the question: Even if his “explanation” had merit, why not simply cut a check to a respected breast cancer research fund and thus help the cause of finding a cure?

          This thing is actually getting stickier, not less.

    2. A partner at one of the biggest and most respected law firms in the world and he acts like a total boob. If a first year associate said anything so stupid at Hogan and Hartson they would be shown the door.  

  9. He wanted his wife to run the charity – and collect a paycheck from it.

    Perhaps that’s what he was told no to, and decided not to bother if there was no familial income opportunity?

    Would also explain why he doesn’t want to answer questions about it…

    1. And it also explains why he can’t answer the question the way it’s posed, and instead has to answer something entirely different.

      I thought it was fairly common knowledge that people can donate money from a campaign to charity, since the issue comes up all the time when candidates get a contribution from someone who later becomes controversial (Tom Delay, Mark Foley, Norman Hsu, etc.). In fact giving it to charity seems to be the EASIEST way to get rid of campaign contributions.

      1. Both the content and ahem delivery have sucked so bad that he’s just managed to clock himself with his own boomerang.

        I don’t think any of this really moves votes one way or another, but right now this blogsmack chattering insider yahoo stuff is really all that’s going on. McInnis needs to show he can start to swim in these kinds of waters if he is going to establish the credibility as a candidate that will make him relevant when it comes time to start moving votes.

        McInnis needs a plausible storyline for this that consists of more than victimhood, red herrings, and subject-changers.

        He can’t logically answer that he is oh so dedicated to helping other Republican candidates, when he did no such thing in the last cycle. His explanation as to why he didn’t financially commit to curing breast cancer after 2004 doesn’t hold water, and is now raising more questions than answering since it is raising questions of financial benefit and FEC guidelines against personal profit.

        No one is really afraid of him, so he can’t bully his way out of it–as Colorado awkwardly witnessed this week. This one needs to be put to bed soon, but I don’t see how he plausibly can at this point.  

        1. I don’t know but I bet this is what happened with the fancy car he leased:

          1. He used campaign funds to pay the lease way down and than purchased the car for a pittance.

          2. The documents concerning the car   (Scooter may have purchased the car from campaign funds and just kept it after he left office) will never see the light of day.

        2. Their unsupported assertion that McInnis’ explanation is “plausible” has been disproven. It’s not the least bit plausible, unless what he was told he couldn’t do involved converting the money for personal use. The Post will now correct the record because that’s what responsible journalists do, and that’s not going to look good for McInnis.

  10. Might it be time to abandon ship if you’re with the McInnis camp? Let Dan Maes and Josh Penry continue with the primary. If he is smart he will exit with what little dignity he has left.  

  11. This is where 5 (cough) 27’s are supposed to chime in and support the candidate you’re coordinating with. Or 501c(4)s for that matter.  

    Really, he could use your help here.  

  12. Certainly, gigantic mistakes on McInnis’s part – these are the kinds of things that should be addressed before an official annoucement, for the purposes of clearing the air

    Nonetheless – if any of you think this primary is over, you are completely wrong – I expect this primary to tighten considerably, but it’s anyone’s game

    If Penry continues making a strong effort to get out and meet people and boost his NAME ID, then I can see him leapfrogging McInnis — still people severely underestimate the fact that McInnis is going to win Pueblo and the Western Slope by large margins, meaning that Penry is going to have to find significant traction with primary voters in Denver, El Paso, and/or Fort Collins – certainly its doable, but not an easy task

    Penry will win Grand Junction – McInnis will take the rest of the Western Slope – McInnis takes Pueblo – no idea on the rest – honestly, this will probably come down to which candidate could put together the best ground game in El Paso

    1. The death of a thousand cuts is not done in by any 1 cut. It’s not really even done in by the 1,000. What does it in is operating as a punching bag. People don’t vote for punching bags.

      Part of the problem is that McInnis isn’t aware that the campaign has started while Penry is heavily campaigning. I also think McInnis isn’t aware that things have changed since the last time he ran and that the web is now second only to paid TV in impact on the voters.

      One interesting data point – I offered to interview all the major Republicans running for Gov & Senate. Josh Penry, Ken Buck, and Ryan Frazier all were quick to say yes (hit scheduling issue with Frazier – mostly at my end). But McInnis – not interested.

      I can understand his turning me down, I’m an ardent Democrat and for someone old-school that has to be weird at best. But he needs to be having someone talk him up on the web, even if it’s FTS & I2 at first.

      Bottom line is I think, McInnis doesn’t think any of this stuff matters much. And 10 years ago it wouldn’t. But I think he’s going to find out that in this new world – it matters quite a bit.

      1. David – you are an excellent interviewer and clearly, your interviews try to go at the soul of the interviewee – if he thinks you’re a ‘Liberal Democrat’ trying to eat him alive, then he hasn’t read your past interviews

        I agree – candidates definitely need to be opened minded to such things, especially today

    2. You really think McInnis will win the rest of the western slope?  I respectfully disagree.  If you think GOP primary voters in places like Delta County want to reward a guy who handed us John Salazar on a silver platter, you’re wrong.

      GOP primary voters in western Colorado (and throughout the state) DO NOT want to go down the “former congressman” road.  They’ve been burned.  Once they’re reminded of McInnis’ record on spending, earmarks, etc. they will have an easy time pulling the lever next August. Trust me.  

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