Al Capone was eventually taken down because of his income taxes.
Will Senator Ted Cruz (R-TX) be felled because of a sleazy effort to artificially inflate his book sales using money illicitly funneled from his campaign coffers?
That question came closer to an answer today as the Campaign Legal Center (CLC) filed two complaints with the Federal Election Commission and with the Senate Ethics Committee alleging that the Texas senator did just that.
“Cruz receives royalties on book sales, so using campaign funds to promote the book violates the ban on using campaign money for personal gain,” a spokesperson for the government ethics group explained.
“Because Cruz receives royalties from book sales, his campaign crossed a legal line by spending donor funds on Facebook ads promoting sales of that book,” CLC’s Brendan Fischer explained.
The question was originally raised by Salon earlier this year after a filing with the Federal Election Commission raising the issue of the payment of hundreds of thousands of dollars made by a leadership political action committee — the Jobs, Freedom, and Security PAC — affiliated with Senator Cruz to a mystery company that had previously bought multiple copies of Cruz’s book, One Vote Away: How a Single Supreme Court Seat Can Change History.
The controversy revolves around $1.2 million paid by the PAC — an amount equal to about 80% of its yearly operating budget — to a company called Reagan Investments LLC and attributed to “sponsorship advertising.”
According to The New York Times, the only other entity registered as making payments to Reagan Investments was another PAC named Trump Make America Great Again, which at least was transparent enough to label their expenditure as being for “collateral: books.”
Campaign finance experts contacted by Salon say that the Cruz-affiliated PAC classified all of its expenditures unusually and opaquely as “sponsorship advertising.”
“Legal experts tell Salon that if the money was for promotional book sales, as the filings may suggest, then the leadership PAC could be using Reagan Investments as a pass-through to allow Cruz to keep the royalties, which are generally between 10% and 15% for hardcover books, and about half that for paperbacks. Political candidates are not allowed to do that through their campaign committees. But the identity of Reagan Investments itself poses a mystery,” the publication writes.
The Salon article delves into the details of what it could find out about the mysterious Reagan Investments LLC.
“The PAC’s filings claim that Reagan Investments LLC is located in an office building across the street from the Texas State Capitol in Austin. The company does not appear in Texas business registries. OpenCorporates records, however, show that a company by that name was organized in Missouri on Jan. 23, 2020 — two days after the PAC reported its first-ever payment to the company, of about $57,000. The agent on that registration, James Thomas III, was involved with a scheme that unlawfully funneled dark money from a conservative nonprofit to a political committee, resulting in a $350,000 FEC fine in 2018.”
“In a phone interview, Thomas claimed he was simply the organizing agent and could not immediately recall who operated the company, or its purpose.”
“The company’s address in Austin, however, matches that of an office suite occupied by a Missouri-based consulting firm called Axiom Strategies, founded in 2005 by Jeff Roe, who managed Cruz’s ill-fated 2016 presidential campaign and advised his successful 2018 re-election contest against Democratic challenger Beto O’Rourke. Roe was also connected to the dark money scheme, and although the FEC did not cite Roe for a violation, Thomas told investigators that he ‘primarily took direction’ from Roe.”
“Roe is also the registered agent for Axiom’s Texas branch. Salon visited the Austin suite, which appeared functional and furnished, but unoccupied. Jobs, Freedom, and Security PAC has also paid Axiom directly, according to federal filings,” Salon discovered.
Ethics experts believe that both the transactions between the PAC and Reagan Investments and the squirrely description of the expenditures merit further investigation.
“‘Sen. Cruz spending nearly a quarter million dollars on ‘sponsorship advertising’ is certainly odd and raises several questions into his leadership PAC’s financial behavior,’ said Jenna Grande, press secretary for government watchdog Citizens For Responsibility and Ethics in Washington, the group that filed the original FEC complaint detailing the dark money scheme involving Thomas and Roe. ‘We would certainly welcome an explanation from him about these suspicious expenditures,’ Grande added,” the Salon article continues,
Brendan Fischer, director of federal reform at the Campaign Legal Center, felt similarly.
“I don’t know that we can conclude that Reagan Investments LLC is a pass-through for book purchases,” Fischer told Salon in an email. “Trump MAGA described its payments to Reagan Investments as ‘collateral: books,’ whereas Cruz’s leadership PAC described every payment to Reagan Investments LLC as ‘sponsorship advertising.’ Just because Trump’s payments were for a specific purpose doesn’t mean we can conclude that Cruz’s payments were for that same purpose when the payments were reported differently.”
“That said, I really don’t know what ‘sponsorship advertising’ means, and it looks like Cruz’s leadership PAC was the only political committee that reported payments for that purpose in the entire 2020 election cycle. Cruz’s failure to meaningfully disclose how his leadership PAC is spending its money means we can only guess about where the million-plus ultimately went,” Fischer continued.
If Senator Cruz is indeed using Reagan Investments as a way to collect publishing royalties, it would appear as if he is laundering money for personal use through the scheme and potentially filling inaccurate campaign finance filings with the FEC.
One of Cruz’s earlier books, “A Time for Truth,” was denied a spot on The New York Times bestseller list because of “strategic bulk purchases” that the newspaper said had skewed the organic sales figures of the book.
It would be ironic if this latest controversy becomes the final nail in Cruz’s political coffin after he survived the horrendous publicity over his Mexican vacation during the recent winter storm-related catastrophes in Texas and his open instigation to insurrection at the “Stop the Steal” rally on January 6th.
Whatever it takes to remove Cruz from office, his departure from the political scene could only be beneficial for Texas and the nation.
Original reporting by Roger Sollenberger at Salon.
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Vinnie Longobardo is a 35-year veteran of the TV, mobile & internet industries, specializing in start-ups and the international media business. His passions are politics, music and art.