The Tea Party Patriots Citizens Fund chairman Jenny Beth Martin is alleging a loan given to a super PAC backing Sen. Thad Cochran (R-MS) in the bitter Mississippi primary race was illegal, according to a complaint she filed with the Federal Election Commission Thursday that was obtained exclusively by Breitbart News.
The complaint says the $250,000 loan amounts to an illegal campaign contribution. It also says, in contrast to the group’s explanation of the loan, that the group’s own filings indicate the loan was not secured with collateral.
Representing the Tea Party Patriots Citizens Fund in the complaint filing with the FEC is high-profile conservative attorney Cleta Mitchell. Mitchell serves on the board of the American Conservative Union (ACU) and is the lead attorney for many Tea Party groups against the IRS over that scandal. She has also testified before various congressional committees about the IRS scandal and other matters.
As Roll Call first reported, Mississippi Conservatives–a pro-Cochran Super PAC–notes on its FEC reports that it had “receipts of $717,993 during the first quarter of 2014, including a $250,150 loan from Trustmark Bank.”
Trustmark is a nationally chartered bank and publicly traded corporation headquartered in Jackson, MS. Its president Harry Walker is a Cochran donor.
Roll Call’s Kent Cooper wrote that “the most unusual aspect of the loan” from Trustmark to Cochran’s Super PAC “is there are no future contributions or future receipts pledged as collateral for the loan.”
“This may be the first reported unsecured bank loan to a Super PAC, especially to one that was only two weeks old,” Cooper wrote. “With no committee track record, and no collateral, it is hard to understand how this loan could have been made in the normal course of business. The committee has only repaid $20,000 of the loan, leaving $230,000 outstanding.”
In response to the Roll Call story, both Trustmark’s president Walker and Super PAC treasurer Brian Perry spoke to the Daily Beast–telling that website that the Roll Call story was based off inaccurate FEC filings.
“The loan doesn’t have guarantors but is instead based on cash collateral,” the Daily Beast’s Ben Jacobs wrote, citing Perry. “As a result, Perry said the group is currently looking into whether to amend its FEC report to make that clear.”
Walker, the bank president and bank official who signed for the loan, Jacobs wrote, “scoffed at the notion” there could be foul play here saying “most national political banks are pretty careful on political loans.”
The bank and Super PAC forcefully deny any wrongdoing, saying it is a loan that was secured with cash collateral. “We made a secured loan with collateral,” Perry said in an email to Breitbart News.
But Tea Party Patriots Citizens Fund, along with its lawyer Foley & Lardner’s Cleta Mitchell–a key conservative attorney who is leading a series of Tea Party lawsuits against the IRS over that scandal–write in the complaint to the FEC that those claims just don’t stand up to the facts.
They wrote that the Super PAC made “its first independent expenditures” on TV ads attacking Cochran’s primary challenger conservative state Sen. Chris McDaniel on Jan. 31, 2014. That expenditure was worth a total of $219,540–an amount the Super PAC did not have.
When the group made that expenditure, according to evidence laid out by Mitchell and Tea Party Patriots Citizens Fund in the complaint, it had “only received $160,000 in contributions.”
“The PAC reports that it had spent $29,000 on January 23, 2014, for a poll leaving a balance of cash on hand as of January 31, 2014, of $131,000,” the complaint reads. “Yet the PAC spent $219,540 for its First Independent Expenditure on January 31, 2014, almost $90,000 more than the amount of contributions the PAC had in the bank at the time.”
“How?” the complaint asks, before answering its own question: “On January 29, 2014, Respondent Trustmark National Bank and its president Harry. M. Walker, made an unsecured, uncollateralized ‘loan’ to the PAC, which the PAC used to pay for television attack ads against Chris McDaniel.”
Perry told Breitbart News his Super PAC filed all the original loan documents with the FEC. “We filed the loan documents and promissory note with the FEC,” Perry said in an email when asked for them.
That would seem to contradict a point raised by Perry with the Daily Beast, when he told that outlet that the FEC forms were not clear enough to ask for specific enough information, but it doesn’t. Jacobs at the Daily Beast wrote, citing Perry, that “the FEC form used by the super PAC simply asked if they were any guarantors.” Basically, Perry is arguing that the FEC forms in use are not made to handle issues like this so they may be unclear–but he says he did file the raw loan documents with the FEC.
But the FEC complaint from Tea Party Patriots and Mitchell makes clear that any FEC form confusion in their opinion is irrelevant given all the other documents and evidence.
Mitchell and Tea Party Patriots Citizens Fund note that the filed FEC documentation “clearly states that there is no collateral for the loan and Trustmark National Bank has no perfected security interest in any collateral as required” under federal law.
The PAC and the bank also, according to the complaint, did not “establish a proper repayment source of a pledge of future contributions” as required by federal law.
The FEC complaint argues, too, that Walker himself committed a separate violation of federal law that prohibits any officers or directors of any national banks–of which he is for Trustmark–to consent to any such “contribution or expenditure” as was made to the pro-Cochran Super PAC.
Also, the complaint notes, Walker made a $1,000 contribution to the personal re-election campaign of Sen. Cochran on the same day that Trustmark bank made its “illegal contribution” to the Super PAC.
In the complaint, the Tea Party Patriots Citizens Fund calls for harsh punishment for those involved in this matter. “All those involved in hatching and implementing this unlawful scheme in an obvious knowing and willful violation of federal law must be punished,” the complaint reads. “TPPCF is appalled that the supporters of incumbent Sen. Thad Cochran (R-MS) are so dedicated to protecting the status quo and maintaining their political power base they have resorted to engaging in a concerted effort to violate federal law.”
In their conclusion, the complaint goes even further: “Upon information and belief, and upon the facts set forth above, Respondents Mississippi Conservatives, its treasurer, Brian Perry, Trustmark National Bank, located in Jackson, MS, and its president Harry M. Walker have, each of them, individually and collectively, violated the Federal Election Campaign Act of 1971, as amended, and must be held accountable and liable for their unlawful actions.”
Earlier in the complain, the Tea Party Patriots Citizens Fund and Mitchell note that the penalties for violation of these laws could be up to five years in prison, hefty fines or both.
This Super PAC has drawn criticism before. Its leader, Henry Barbour, is the nephew of former Mississippi Gov. Haley Barbour–a major supporter of Cochran and donor to this super PAC. Henry Barbour’s brother Austin Barbour is a senior strategist for the Cochran campaign, and the work out of the same building in Jackson, MS.
While Perry answered questions about the nature of the loan, he has not responded to a request for comment about the FEC complaint. A spokesperson for Trustmark National Bank would not immediately comment when reached by phone on Thursday.
Update: After publication of this article, Trustmark spokeswoman Melanie Morgan told Breitbart News that “the promissory note filed with the FEC indicates that this is a fully collateralized loan.”
Morgan pointed to a paragraph at the bottom of the promissory note that reads:
If any part of this note cannot be enforced, this fact will not affect the rest of the note. Lender may delay or forgo enforcing any of its rights o remedies under this Note without losing them. Borrower and any other person who signs, guarantees, or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor. Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability. All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize union or perfect Lender’s security interest in the collateral; and take any other action deemed necessary by Lender with the consent of or notice to anyone. All such parties may also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made. The obligations under this note are joint and several.
Update II: Morgan added to her original comment, emailing Breitbart News to point to another paragraph on the promissory note document filed with the FEC: “COLLATERAL: Borrower acknowledges this Note is secured by the’.following collateral described in the security instrument listed herein: certificates of deposit described in an Assignment of Deposit Account dated January 29, 2014.”
Mitchell responded back to Morgan’s comments, noting that what Morgan said is not sufficient evidence of a “fully collateralized loan.”
Breitbart News has asked Morgan for all loan documents and if the bank filed a UCC-1. She has not yet responded.
Update III: Perry responded to FEC complaint from Mitchell and Tea Party Patriots in an interview with Jackson Clarion-Ledger, also arguing that the loan is secured by collateral. That collateral, he told the local paper, is via a certificate of deposit that belongs to a third party who Perry will not identify.
In addition, Hall cited Perry as saying that Walker of Trustmark Bank decided that the owner of the CD would not be considered a “guarantor” for the loan–so no guarantors were listed in the FEC filing.
Update IV: In response to the Clarion Ledger report, Mitchell told Breitbart News that “if they have a guarantor or someone else’s account as collateral and have failed to disclose that it is another violation and we will amend the complaint to add that.”
Tea Party Patriots FEC complaint against Thad Cochran Super PAC
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