State GOP $2 million in debt

The Republican Party of Minnesota is $2 million in debt heading into an expensive election year, including more than $700,000 owed to lawyers in last year's gubernatorial recount.

GOP officials released the new financial information Friday, disclosing previously unreported debts, credit card bills, and fees from the recount far greater than anyone expected.

Party leaders decided to release the report, including what they called "ugly" information, in an effort to rebuild trust among voters, activists and contributors. The new information showed a party burning through cash far faster than it was taking it in as the former chairman did not disclose mountains of debt to party leaders.

Republicans said that they found no immediate evidence of criminal wrongdoing, but that they could not rule it out. "The people in the Republican Party need to know where we stand, warts and all," said Jeff Johnson, a Republican National Committee member who led the review of party finances. "There are some warts in here."

Also Friday, the party's secretary-treasurer, David Sturrock, resigned, saying in a letter to activists that the party needs someone in that position who does not live 160 miles from party headquarters and who has "significant financial management experience."

Sturrock also said secretary-treasurers "need to be informed more fully. ... I was neither consulted nor informed about ... 2010 recount costs. Also, the unreported obligations identified by the current financial review were not known to me."

It was another in a series of resignations by party leaders. Former chairman Tony Sutton resigned early this month amid mounting pressure about party finances. He would not comment in detail Friday, but released a statement saying he doesn't regret spending money to win control of the Legislature for the first time in 40 years.

Businessman Mike Vekich, who helped the GOP dig through expenses, said they discovered $415,211 in debt that had never been reported. In addition, the party owes $100,000 in refunds to contributors and in checks that had been reported as paid but had not been sent to vendors.

Vekich and Johnson also discovered $18,000 in credit card debt and $200,000 in bank lines of credit that are tapped out. They are still trying to learn more details about the credit card expenses.

The GOP owes money to more than 60 entities, including thousands of dollars to local political consultants, its health insurance provider and even $797 to Kieran's Irish Pub.

All told, the party owes $1.28 million, records show. That doesn't include $717,000 in unpaid legal fees amassed during the gubernatorial recount between Republican Tom Emmer and Democrat Mark Dayton. Party officials say it remains unclear whether they are legally obligated to pay the recount debt, but lawyers who represented Emmer and the GOP insist the party is liable for the bills.

The latest financial information does not include a request to repay a $75,000 contribution by Tom Petters, imprisoned on a conviction of orchestrating a $3.65 billion Ponzi-type scheme. Those representing Petters' receivership are asking that the money be returned.

Republicans released the information a day before party activists meet Saturday to select a new party chairman, who will have to pivot and focus on digging the party out of debt. The activists will convene in St. Cloud to elect the chairman and settle on a path forward, which could include a more detailed, forensic audit of party finances.

State GOP leaders are already working with federal election officials to correct campaign finance reports dating to 2009, which could result in steep fines.

The mounting financial pressures come as the party must find a way to wage campaigns to hold control of the Legislature, defeat President Obama and find a credible candidate to challenge Democratic U.S. Sen. Amy Klobuchar.

"We are committed to ensuring that the Republican Party of Minnesota is accountable for its actions and is more transparent with its information," said Kelly Fenton, deputy party chairwoman.

Johnson would not say whether he thought Sutton, unanimously re-elected GOP chairman a year ago, had misled party officials about the GOP's financial health. "I am not going to go there," he said.

The debt includes $120,000 remaining on a $170,000 fine levied by the Federal Election Commission from reporting discrepancies when Sutton was party treasurer.

Republican executive committee members said they had been fighting with Sutton for months over the release of party financial information. They said they were not able to get some documents they needed until after Sutton resigned.

Before Sutton left, "we knew we were being lied to," said executive committee member Pat Anderson, former state auditor. Sutton was "running wild" with party finances and "hiding bills not only from the executive committee, but regulatory agencies, even the treasurer." Sutton said he would not respond to Anderson's allegations.

Johnson said he expects that everyone owed money by the GOP will eventually be paid, but he couldn't say when.

The new finance revelations cap what has been one of the most traumatic months in the history of the state GOP. Soon after Sutton left, Senate Majority Leader Amy Koch resigned her leadership post after admitting she had an improper relationship with a Senate staffer.

Republicans are not the only ones facing debt. The DFL Party started the year with about $725,000 in red ink. DFL Chair Ken Martin said the party has paid down more than $500,000. "I anticipate that we will be completely out of debt by the middle of next year, for sure by the end of 2012," he said.

Baird Helgeson ? 651-222-1288

Source: http://www.startribune.com/politics/136461988.html

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