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The Water Cooler Title: Another Question, This Time Financial, for Herman Cain
Early in his candidacy, Herman Cain may have accepted tens of thousands of dollars in goods and services for his campaign from a tax-exempt organization founded by his top aide, documents from the organization show, raising the prospect of serious violations of tax and election law by both Mr. Cain’s campaign and the organization. The documents suggest that the nonprofit organization, Prosperity USA, effectively subsidized some early costs of his presidential bid, paying for computer equipment, charter planes and air travel for Mr. Cain or the aide, Mark Block, who is his chief of staff. Such expenditures would violate federal election and campaign laws, which prohibit tax-exempt groups from engaging in any political activity or contributing to election campaigns, a major problem for Mr. Cain. He spent much of Monday fending off accusations that he had sexually harassed two former employees of a trade association he once led. The nonprofit’s internal documents cite costs “due from FOH” — apparently short for Friends of Herman Cain, the name of Mr. Cain’s presidential campaign committee — during late December 2010 and January 2011. Those costs include thousands of dollars in travel expenses to Iowa, Louisiana, Las Vegas and Houston for “travel and meetings.” An additional $3,764 was owed for iPads. “If they are supporting his campaign, whether directly or indirectly, they are violating the law,” said Lawrence H. Norton, an election lawyer at Womble Carlyle and a former general counsel of the Federal Election Commission. The documents were obtained and posted online by The Milwaukee Journal Sentinel, which reported on the discrepancies on Monday. A spokesman for Mr. Cain did not reply to an e-mail seeking comment, and a lawyer listed on Prosperity USA’s incorporation papers did not return a phone call. Based in Wisconsin, Prosperity USA incorporated in April 2010 and has sought tax-exempt status from the Internal Revenue Service, according to documents filed with the state. Mr. Block was a Tea Party activist who formally ran the state chapter of Americans for Prosperity, a nonprofit grass-roots advocacy organization founded by the conservative Koch brothers and others. And Mr. Cain has for years spoken at events organized by Americans for Prosperity or Tea Party groups, during which he first met Mr. Block. While Mr. Cain did not formally enter the presidential campaign until May, he began accepting contributions in January and his campaign disclosed so-called testing-the-water activities dating back to late December 2010, according to his federal campaign filings. None of the expenses apparently owed to Prosperity USA appears to be accounted for in Mr. Cain’s presidential filings, whether as in-kind contributions, services rendered or debts. It is not clear whether Mr. Cain or his campaign ever paid those bills or reimbursed Prosperity USA. “If any of these expenses were paid by the nonprofit, it is possible that they thought they were paying for expenses entirely unrelated to ‘testing the waters,’ ” said Paul S. Ryan, associate legal counsel at the Campaign Legal Center, a nonprofit watchdog group. “But the fact that this not-profit is listing on its balance sheet money owed to them by a federal campaign committee is problematic.” Prosperity USA appeared to be a shoestring operation for the first six months of 2010, according to the documents, raising about $65,000 in grants and spending just $58,893. But sometime during the second half of the year, the group’s spending roughly tripled, fueled by a $150,000 loan from an unknown party. The group’s largest expense was a $100,000 fee paid to the Congress of Racial Equality before Mr. Cain’s appearance at a Martin Luther King Jr. dinner in January. By the end of February 2010, according to the documents, Prosperity USA was running more than $100,000 in the red. Subscribe to *Tea Party On Parade* Post Comment Private Reply Ignore Thread Top • Page Up • Full Thread • Page Down • Bottom/Latest Herman Cain is running as someone who supports the Constitution. He is allowed to ignore unconstitutional election laws.
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