Internal Minnesota GOP finance probe finds lack of controls but no crime

An internal investigation by the Minnesota Republican Party into its finances found an ongoing deficit of more than $26,000 left from a conference last fall, questionable payments to contractors, and heavy credit card spending by the former party chairman.

Party officials said the review found no evidence of illegal behavior, but it did say that a former party official did not reply to repeated attempts to get information about his spending.

The special committee appointed by Republican Party Chair Pat Shortridge to review party finances looked at money spent on outside contractors, reimbursements to former staff members and the possibility that the party still owes money to vendors.

"We discovered instances of misreporting, both internally and externally, a lack of adequate internal financial controls, examples of questionable decision-making and a lack of accountability and transparency," said Jeff Johnson, who is the chairman of the committee.

The investigation comes after the abrupt departure of former party chair Tony Sutton last fall and subsequent news that the party was $2 million in debt.. Sutton didn't report all the party's spending, and members of the party's executive committee said they had little oversight over how Sutton was spending the party's money.

Currently, the party estimates that it still owes between $1.2 and $1.3 million.

Party leaders were hesitant to blame Sutton for spending under his leadership.

"I think there is blame to go around," Johnson said. "I'm not going to pin this on one person." The report details 11 spending items between 2008 and 2011, including receipts and expenses related to the Midwest Leadership Conference, a non-profit corporation set up to pay for a gathering of Republicans in Bloomington last fall.

The conference has an outstanding balance of more than $26,000, including payment of $1,442 to the Tarrance Group, a Republican polling firm in Virginia, and a payment of $24,881 to the DoubleTree Hotel, where the conference was held.

But Johnson said the party still hasn't decided whether it is on the hook for those payments. The Midwest Leadership Conference was created as a separate corporation, so the committee has not been able to review all documents associated with the fund, Johnson said.

The committee also investigated consulting payments to candidates, officeholders and to Civis Communications, a political consulting firm owned by one of the GOP's moist generous donors, Robert Cummins.

While it's not illegal to hire candidates, officeholders or donors, some say the practice raises ethical questions. Nevertheless, Johnson said it would be a bad idea to prohibit hiring of party insiders in the future.

"There might be a donor who has a company that can best provide us a service or a lawmaker or candidate who may be would be the best person for that job," Johnson said.

The investigation wasn't able to tie-up all loose ends.

For instance, the report is mum on a Campaign Finance and Public Disclosure investigation into legal fees incurred by a fund called Count Them All Properly, a corporation set up to pay for costs associated with the 2010 gubernatorial recount.

Lawyers representing the Republican Party during the recount say the party owes them money, even though they were asked to bill Count Them All Properly in the spring of 2011. A $1,003 mileage reimbursement to Ryan Griffin, the party's executive director under Sutton, is also unaccounted for, according to the report. Griffin did not return the committee's calls to get more details on the reimbursement, and $14,000 he was paid for legal services. The committee also wanted to question Griffin about work done by Tim Goer of TG Med who, among other things, researched the validity to medical marijuana.

Goer told the committee he had a verbal agreement but no written contract with Griffin to do the research. Goer said he did not save his work and wrote few reports on his research, according to the report.

Last fall, members of the GOP's executive committee started raising questions about how party dollars were being spent. After revelations that the party was deeply in debt, the executive committee agreed to conduct the internal investigation.

Some members of the committee said they wished they had been given more oversight over Sutton's financial decisions, particularly with big-ticket items including more than $200,000 paid to Strother Communications to rebrand the party, and the more than $1 million paid to law firm Trimble and Associates for its work on the 2008 U.S. Senate recount and the 2010 gubernatorial recount.

To protect the party from similar financial problems in the future, the party is recommending several changes to its constitution, including a committee to oversee finances that will be responsible for establishing internal financial controls and to receive quarterly financial reports from the party treasurer.

The party is also proposing that all future contracts be signed by the party chairman and treasurer. Any contact costing more than $5,000 annually that isn't already in the budget must be approved by a majority of the executive committee.

Party chairman Shortridge said those changes will make for a more effective, efficient and transparent state party.

"Going forward, we have a much better understanding of where things got off track, we have a very good understanding of things we can and should do differently going forward," he said.

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