Braun campaign says loans complied with federal laws

Editor’s note: This article has been updated.

Republican U.S. Sen. Mike Braun improperly gave more than $1 million to his 2018 campaign and received contributions in excess of legal limits, a draft audit by the Federal Election Commission alleges. But Braun says additional information has been provided showing that the loans were legally compliant.

A draft report by FEC staff, dated Nov. 3, states that Braun’s campaign overstated receipts and disbursements by more than $6 million and improperly received $1.5 million from Meyer Distributing, an auto-parts distributor owned by Braun, that were reported as loans.

Braun’s campaign emphasized that the audit is only a draft and that additional information it has provided to the FEC will show that all contributions and loans fully complied with the law.

Braun was president of Meyer Distributing when the company issued two checks in October of 2018 to Braun’s campaign.

The audit says Braun’s campaign did not repay the $1.5 million but reported $1.25 million as a contribution from Braun on the disclosure report and reported the remaining $250,000 as an outstanding loan balance.

Political campaigns are prohibited under federal law from accepting contributions from the general treasury funds of corporations.

Braun defeated incumbent Joe Donnelly, a Democrat, in 2018 to win the Senate seat in one of the nation’s most hotly contested races.

The 57-page report, called a draft final audit report, was submitted to the Federal Election Commissioners, who can take action on the findings. The report did not spell out possible outcomes.

“The DRAFT audit report issued by the FEC’s audit staff nearly two months ago was just that: a draft issued before the campaign committee provided the necessary documentation to clear up the loan issues raised in the report,” Joshua Kelley, Braun’s chief of staff and senior political adviser, said in a written statement.

“However, if you have read the documents that the campaign committee has since provided to the FEC or listened to the recent hearing with the FEC Commissioners, it is clear that the final version of the FEC’s audit report will conclude that all the loans fully complied with the law.”

Kelley’s statement says FEC audits take time to work, with back and forth between the campaign and federal election officials. “We’re not the least bit concerned about how the process will end,” Kelley added.

The FEC staff report also includes a 10-page response from the Braun campaign, which blames many of the problems on its former treasurer, Travis Kabrick.

The campaign said it hired Kabrick to serve as its treasurer “because he was, at least ostensibly, an experienced FEC compliance professional” who had worked for many federal candidate committees over many years.

“At some point during the 2018 election cycle this individual began making mistakes and failing to perform his services as warranted (and for which he was being paid),” the Braun campaign wrote to the FEC. “He ultimately vanished, and he has not been able to be located since the end of 2018.”

The campaign said it retained a new treasurer, who “immediately began to uncover various accounting and reporting problems” while attempting to prepare the campaign’s year-end report in 2018.

The new treasurer began to correct mistakes, errors and other problems in the committee’s accounts and reports “long prior to the commencement of this FEC audit,” the campaign wrote to the FEC.

The draft report also found apparent prohibited loans and lines of credit totaling $8.55 million, including five loans and 11 lines of credit from financial institutions that did not appear to be made in the ordinary course of business because they were not made on a basis that assured repayment, the report said.

Loans to political campaigns require loans to be made in the ordinary course of business, including assurance of repayment, such as security interest in collateral owned by the candidate or campaign committee. Braun’s campaign documents “showed no guarantor nor collateral offered to the financial institutions making the loans,” the report said.

Braun’s campaign told the FEC that the $1.5 million was personal funds “owed by Meyer Distributing to the Candidate, and the Candidate paid taxes on the amount as income to him.”

The FEC staff audit compared the Braun campaign’s reported financial activity with its bank records and discovered overstated receipts and disbursements of about $6.3 million each.

It said the campaign did not ultimately report the repayments from Braun’s personal funds correctly and that loan repayments should have been reported as in-kind contributions.

During audit fieldwork, the FEC staff compared the Braun campaign’s financial activity with its bank records and discovered a misstatement of receipts and disbursements in calendar year 2018.

The FEC report said its audit staff also identified 10 contributions totaling $262,600 that the campaign failed to report on time, including seven contributions totaling $9,100 for which the campaign misreported contribution dates.

The audit also found 1,363 contributions totaling nearly $1.5 million that lacked complete or any information on the contributors’ employer.

The FEC staff also discovered that Braun’s campaign received apparent excessive contributions totaling $1.17 million, including apparent excessive contributions from individuals totaling $985,345 and from political committees totaling $188,212.

The audit also uncovered several other findings, many of them showing apparent sloppy documentation, such as failing to properly disclose joint fundraising memo entries totaling $933,814 from 13 joint fundraising committees.