Our Perry Story Misfired. Here's Why.

by Alec Goodwin

(Photo: Sarah Whitmire/Center for Public Integrity)

Yesterday morning, we published a story saying that Jeffrey Miller, campaign manager of former Texas Gov. Rick Perry's 2016 presidential campaign and the director of his leadership PAC,  received nearly half the money spent by those organizations.

Yesterday afternoon, we pulled the story.

Miller contacted us about 27 hours after we first tried to reach him for comment on the story, and nearly eight hours after the story was published. Miller told us he made no money from the campaign and PAC at all; he said he'd been traveling for work and didn't get our message until after the story was up.

That was our bad. We should have tried harder to contact him, and/or waited longer for him to respond.

But it's useful to explain how we got where we did with the story in the first place, because it's a fact that two LLCs controlled by Miller (and, in one case, Perry senior adviser Rob Johnson) received a cumulative $1.35 million from the Perry campaign and PAC. FEC disclosure forms filed by the campaign state that the Abstract Communications was paid $629,000 for "strategy consulting/media," "strategy consulting/travel/event product," and "media consulting."  And FEC filings by RickPAC say that the $720,000 to K&A Strategies paid for "political strategy and advertising consulting services."

Miller's claim that "zero money was paid to either myself or Rob Johnson out of either of those LLCs" was backed up by  Rosa Perez, who ran payroll for Abstract Communications and K&A Strategies through her accounting firm, Abundant Solutions, and received mail for the LLCs at her office. 

But Miller also told us that payments to the firms covered a wide range of expenses for the campaign and PAC, including  "video production, fundraising expenses, digital expenses, website development and budget and compliance management, among other things."

That's a much more detailed list than the apparently catch-all descriptions on the campaign and PAC FEC forms -- and potentially a reporting violation.

According to FEC rules, the "purpose" section for expenditures "must be sufficiently specific to make the purpose of the disbursement clear." They also say that "filers should consider the following question: 'Could a person not associated with the committee easily discern why the disbursement was made when reading the name of the recipient and the purpose?'"

The Perry campaign's descriptions of how the money was spent cross the line, said Larry Noble, general counsel of the Campaign Legal Center. "The campaign can't do that," said Noble. "We're not learning anything from these reports."

Miller -- whose prior political roles have included advising Majority Leader Kevin McCarthy and former California Gov. Arnold Schwarzenegger -- said that other campaigns had used the same strategy. "Not unlike the Mitt Romney presidential campaign, an LLC was set up to pay vendors and employees," he noted.

The main LLC used by the 2012 Romney campaign was American Rambler Productions LLC. The Romney campaign disbursed money to American Rambler which then used it to pay a group of advisers and strategists as well as to coordinate ad buys and other consulting services.

But the Romney campaign disbursed separate payments to American Rambler for each type of expenditure. So, for example, in July 2012, the campaign paid American Rambler separately for media production, polling expense, strategic consulting and other services.

The Romney campaign did set a precedent that campaigns could use LLCs to obfuscate which vendors were being paid, and how much -- something campaigns do in order to avoid allowing various vendors and employees to compare their payments to the competition (or to colleagues).

But the Perry campaign and leadership PAC, in contrast to Romney's campaign, seem to have deployed the two LLCs as all-purpose accounts that were used for a diverse set of purposes, some of which were not disclosed to the FEC.  Asked why the Perry effort did this, Miller would only say "at the end of the day, it's a strategic decision."

Ultimately, if this was okay, a campaign could disburse all its funds into a bank account held by an LLC controlled by the campaign manager -- who could make all of the campaign's disbursements from that account without ever disclosing anything other than the original payment, which might be described as being for, say, "strategy consulting." That would leave the public with little idea what the money was used for.

In previous years, said Bob Biersack, a veteran of the FEC who is now CRP's senior fellow, a Request for Additional Information would have been sent to the campaign and PAC by staff at the agency asking for more specifics on the expenditures. That doesn't appear to have occurred in these cases.

And one thing Biersack and several lawyers we consulted agreed on: The FEC of today is unlikely to take this up.