Funding Liberty! Table of Contents
Funding Liberty!
Chapter 4
Pursuit of the Nomination
Browne's Opponents Speak
We now reach 1996. The machinations of the Browne campaign remain underground, largely out of sight of loyal Libertarians across America. Until the revelations of 2001, only a select few suspected that matters were not quite as open and above board as they appeared.
Among those select few were staffers and supporters of Browne's competitors, Rick Tompkins, Irwin Schiff, and Doug Ohmen. In a recent letter circulated by Richard Boddie, long-time—and now former--Libertarian Activist George O'Brien wrote of a rough draft of Chapter One of this book:
"George Phillies' excellent piece on the insider support of Browne's 1996 nomination campaign appears generally accurate. The only error was in claiming that the people in the Tompkins campaign thought there was a 'level playing field'. We knew otherwise from the beginning.
"I made some posts in '95 to that upset a number of people as I began to connect the dots. We knew the fix was on. At the same time, we knew there was no way to bring it up during the campaign without leading to charges that we were trying to destroy the LP.
"Our critique of the Browne campaign was that it was designed primarily as a fundraising vehicle capable of paying the insiders a fair amount of money. Before the nomination, we contended that Browne's campaign was essentially a fraud as was demonstrated by the promises to campaign full time in New Hampshire in fund raising letters. He did not even visit New Hampshire.
"My critique of the Browne campaign started with his original proposal of a 5% national sales tax, which he eventually dropped. It later included his sell government assets to fund Social Security gambit, which did not make financial sense. On some issues like the sales tax, our efforts led him to drop the proposal even though it was a big winner among conservative donors. In truth, Browne stayed as close to the hard money conservative line as could without getting into too much trouble with libertarians. But it was a constant struggle.
"In any case, it had become clear that the driving force behind everything the Browne campaign did was money. It had also become clear that there were too many people in power in the LP with an awful lot to lose if he did not win the nomination.
"The Tompkins campaign had no illusions about being able to raise as much money as Browne, but the plan was to avoid spending it all on hacks.
"George L. O'Brien"
Rick Tompkins, writing to me in 2001, presents a similar description of the unseen issues, notably his campaign's difficulties in getting mailing lists from the National Headquarters:
"All we were trying to get were the lists of national convention delegates, including the previous one or two conventions. We never had any intention of running the type of campaign Browne & Co. were running. We only planned to send a comprehensive package of information, including a videotape of me speaking to the issues, to as many likely delegates as possible.
"As I recall, Tamara Clark dealt mostly with Willis. Dasbach was involved at some point because she told him of the problems we were having. They put us off with silence, at first. Then, when we kept after them, the excuses began. We didn't really believe them, having learned by that time their tactics and biases, but since they were in total control of the information, there was little we could do. This went on for many months, at least 5 or 6, until it was finally too late. We could see that Browne was getting whatever info he wanted, whenever he wanted it—including very unbalanced support from the LP News.
"The disk we finally received (so late it wouldn't really have mattered much, anyway) purported to be from a national convention several years earlier, and would therefore have been of limited use in any case, but the disk was defective, so that we couldn't even open it. We got a lot of 'sincere' apologies from Willis, again. Gee, do you think Browne had that much trouble getting whatever list(s) he wanted?
"Since the person in charge of the party's large donor program at the time (Sharon Ayres) was also Browne's campaign manager, does anyone doubt that he had access to that list, as well—especially in light of all the other chicanery that went on, only a small part of which, in all likelihood, has come to light?"
"...That seemed obvious even at the time [GP: that Winter, Willis, Ayres, Cloud and Dean were the inner campaign strategy circle of the Browne 1996 campaign.] And it looked to me as if Bergland was in the wings, though he had to try to look impartial. Bill Winter was cold and uncommunicative toward me from the start, and Willis was his usual arrogant and supercilious self.
"Jack Dean displayed deep anger with my opposition to Browne. He seemed particularly incensed over my pointing out some uncomfortable facts about Browne & his campaign, advocating taxes, etc. for just one example (which they had started adamantly denying even though he had done it on a number of occasions, with cameras recording—and many of us had watched the tapes). Browne's advocacy of taxation was one of the factors that had brought me into the race in the first place. And let's not forget Emerling, who now goes by 'Cloud'."
Finally, I have spoken with activists associated with yet another exploratory committee, a committee for a candidate who never got off the ground but who researched conducting a nominating campaign for 1996. From those activists, one learns that in 1995 the LNC presented itself as having a fixed rate for renting names from the mailing list, namely $125 per thousand as a cash payment in advance. 'Cash payment in advance' and '$125/1000 names' are still the terms in 2001. Furthermore, the exact text of the mailing and the mailing date for each mailing had to be approved by National Headquarters before the list would be rented.
The requirement that National Headquarters had to approve the text of each mailing to LP members, and that National Headquarters also got to set the mailing date, raises a further conflict of interest issue. Under the rules, if Ohmen, Schiff, or Tompkins wanted to do a mailing to the Party membership, they had to submit the text of their letter in advance to Perry Willis. Given Willis's attitude toward Browne as reflected in his confession, it appears very likely that the text would rapidly have reached Harry Browne's campaign. Browne would then have had advance notice to prepare a riposte to any attack by his opponents. Indeed, given that National Director Willis set the mailing dates for each list usage, Browne would have been able to mail his response before his opponents got to mail their attack. Under these conditions, it would have been impossible for Ohmen, Schiff, or Tompkins to conduct an effective direct mail campaign to the Party membership.
What Browne Spent To Attain the Nomination
Most Libertarians saw only the outside of the campaigns, the part that put candidates in front of the prospective convention delegates. That effort cost money. What did Browne spend? The Browne Campaign's FEC reports for this period cannot be accepted without some caution. According to campaign accountant Stuart Reges, as quoted above, in at least one case the FEC filings were deliberately false and misleading. Unbeknownst at the time to Reges, money for Willis was laundered through a third party so Reges would not know to include the payoffs to Willis in the campaign's FEC filings. Reges reports that he only learned of the scheme in 2001, after Willis confessed. In another case an FEC filing describes payments to a specific party for a specific reason with a claimed purpose that is not the same as the purpose listed for other payments to the same party for the same reason. In this case, the manipulation of 'purpose' had the effect of hiding from interested readers financial support that LNC, Inc. had given to Browne’s Campaign.
Reges reported that in 1996 the campaign had regular multi-hour conference calls to discuss strategy and planning. Under these conditions, it would have been possible to hide from campaign accountant Reges a few small payoffs to Willis, but the Campaign was unlikely to have been able to hide substantial expenditures from Reges. Based on Reges's word, the bulk of the 1996 campaign filings should therefore be reliable.
With that caveat, what can we say about the 1996 Browne Campaign? The link to the prior chapters is the Willis Invoice. At some point in 1995 or early 1996, Willis entered into the 'February Contract', nominally with Dean, Spear & Associates. The Dean in question is Jack Dean, a regular supplier of Internet services to some Libertarian campaigns and apparently an insider on campaign strategy discussions. If there was only one contract, why call it 'February'? Was the label redundant? Or were there other contracts?
Browne's 1996 fundraising letters included February 1996 'Our plan to produce a professional and powerful National TV ad and recruit hundreds of CEOs', March 1996 'Our plan to get into the 1996 TV debates', June 1996 'Our plans to get double digits in national election polls', August 1996 'Our new plan to get into the TV debates', and finally in October 1996 'Our plan to saturate CNN with TV ads and to produce a professional 30 minute video for TV ad placement'. Readers may recall a letter saying that Ladbroke's—an English odds-maker--had pegged Browne's odds of election as being the same as Ross Perot's, or a letter saying that the radio audience could be increased from 300,000 to 1,000,000 a week. It is difficult to determine which fundraising letters are the ones itemized by Willis in his Invoice. The Invoice refers to December, January, and February letters, Willis being paid $500 for each one, but does not identify them as to content.
Were the plans effective? Consider the 'powerful and professional National Ad' whose purpose it was to recruit 'hundreds of CEOs' to support Browne. The rationale for believing that a television ad would sway corporate executives was not clear. Nor was it apparent why CEOs were an especially attractive target. Large numbers of companies and their stockholders benefit from corporate welfare. Why would their CEOs want to cut off their government benefits? There is no indication that this ad was effectively deployed.
From the letters' titles, Browne had many plans. Almost none worked. Money was raised, but results were never attained.
We now come to the actual campaign spending for January-June 1996. After I completed this section of the book, additional documents concerning Browne's spending came to light. The additional documents more than confirmed what my forensic accounting is about to show. I have deliberately left my original text in place, so that you will first see my circumstantial analysis, and then see the proof that my analysis was correct. Why this repetitious presentation? I am going to apply the same forensic accounting method to reveal a very similar set of discrepancies in the 1999 spending patterns, discrepancies that remain unexplained, so I want to convince you that the method works.
January 1996
At the start of 1996, the Browne Campaign shifted to monthly disclosure filing. For January, disbursements to staff members included
Michael Cloud $3,648
Terry Bronson $2,887
Lisa Paley $1,820
Stuart Reges $1,146
Harry Browne $ 380
William Winter $ 325
while payments in January to vendors included
Time Printing $5,492
D&S Mail for Less $4,772
Libertarian National Committee $3,567
Dean, Spear, and Associates $1,500
Accumail $1,162
Postage $1,156
Liberty Publishing $ 951
B&B Duplicators $ 950
Note the list rentals: $3567 to the Libertarian National Committee and $951 to Liberty Publishing. Note also the large payments to printers and mailers, including Time Printing, D&S Mail for Less, Accumail, and B&B Duplicators. Mailing list rental was still around 20% of the other mailing costs.
February 1996
We now reach February, 1996, the month in which Perry Willis secretly billed Dean, Spear & Associates $2000 for some of his work for the Browne campaign. Willis admits that he was paid. Where did the money come from? Dr. James W. Lark, III, 2000-2002 Chair of the National Libertarian Party, in a report to the Libertarian National Committee dated 13 August 2001, traced the invoices farther. Lark reported that the Libertarian National Committee has possession of the financial records of the Browne 1996 campaign, including an invoice dated March 15, 1996 from Dean, Spear & Associates to the Browne campaign. The new invoice is for December, January, February, and First Prospecting Letters, in the amount of $2300, with an additional $425 for graphics. These appear to be the letters noted in the Willis Invoice. The additional $300 appears to equal the cost of a 15% commission for Dean, Spear. The identity of the person who did Browne's graphics, which to some observers was carefully imitative of the style used by the LNC's own fundraising letters, is not revealed by the invoice. According to Lark, the Dean, Spear & Associates Invoice was only paid by the Browne campaign on July 3, 1996.
Disbursements to staff members, consultants, and the candidate included
Stuart Reges $7,615
Robert Martin III $7,442
Terry Bronson $4,250
Alexis Thompson $3,557
Lisa Paley $1,830
Sharon Ayres $1,324
Harry Browne $ 990
There were also payments to vendors, namely
Jack Williams (books) $6,844
Carlson Wagonlit Travel $6,720
Accumail $6,215
WK Advertising (video services) $2,021
Dean, Spear & Associates $1,500
Champion Printing $1,082
Liberty Publishing(list rental) $ 958
Postage $ 247
There was a large postage bill, but no matching printing bill reported during this month. However, expenses can drift over from one month to the next. The list rental from Liberty Magazine would appear small to correspond to the money that was spent on mailing. There was even spending that could have involved outreach, namely Alexander Buttons & Badges $585.
Alexis Thompson is reported by an Arizona correspondent to have remained active with Libertarian political activities as a contractor and petition organizer. What did Terry Bronson do for the campaign? In his report to the LNC, Lark reveals some of the details of invoices from Bronson to the Browne campaign. According to Lark, her invoices for the February-March period include over 300 hours of "proofing fund-raising letters" at $15 an hour. Lark also reports an interesting event, namely that Bronson Office Services billed the Browne Campaign for three telephone calls made from its fax number at 8:26, 8:29, and 8:31 AM on February 27, 1996. This date is day before the date of the Willis Invoice. Lark identifies the telephone numbers being called as Perry Willis's home voice/fax number in Virginia, the Dean Spear & Associates fax number in Fullerton, and Michael Cloud's fax number in Los Vegas. Lark notes the telephone communications while asking if Michael Cloud knew of Willis's covert involvement in the campaign, a question that remains unresolved.
March 1996
March disbursements to staff members included
Harry Browne $3,849
Terry Bronson $2,189
Lisa Paley $1,830
Alexis Thompson $1,616
Sharon Ayres $1,500
Robert S. Martin III $1,060
Diane Williams $ 860
Michael Cloud $ 393
Stuart Reges $ 110
while payments to printers and mailers included
Carlson Wagonlit Travel $8,106
Mount Vernon Printing $7,134
Accumail $5,385
Postage $1,000
D&S Mail $ 780
Time Printing $ 399
and spending perhaps on outreach included
Newmark Sign Shop $1,528
Total printing came to $8300, while postage exceeded $6400. This month there is no expense at all for list rental. Where was the mailing sent? There was a list rental last month, but there was also a large matching postage bill. Were all mailings sent to donors? Willis's 8/1/95 memo to Browne's campaign leadership, as released by Famularo, refers to "...our 2,000 donors." Had Browne's donor list grown enough to require almost $15,000 in mailing expenses to reach? That would appear to require tens of thousands of names, the equivalent of multiple mailings to the entire National Party membership, but there is no indication that Browne had so many donors.
April 1996
Payments to staff members included
Stuart Reges $5,850
Lisa Paley $1,570
Harry Browne $1,151
Terry Bronson $1,090
Robert Martin III $1,006
Michael Cloud $ 906
Alexis Thompson $ 860
Diane Williams $ 580
while disbursements to vendors included
Accumail $4,790
Carlson Wagonlit Travel $3,900
Mount Vernon Printing $1,914
Dean Spear & Associates $1,500
J. Harris Dean $1,312
D&S Mail for Less $1,414
Champion Printing $1,350
Liberty (list rental) $ 965
Postage $ 500
Time Printing $ 514
and spending on possible outreach involved
Alexander Buttons $ 585
For the month, mailing expenditures included $3778 for printing, $6703 for postage, and all of $965 for renting the Liberty Magazine list. Where were these mailings going? Even with several ounces of first class postage, the postage bill appears to correspond to 15,000 or so pieces. The only list rental for the month was for Liberty magazine's list, which had far fewer names.
May 1996
Payments to associates of the campaign included
Michael Cloud $4,631
Harry Browne $1,987
Terry Bronson $1,912
Lisa Paley $1,546
Robert Martin $1,320
Diane Williams $ 664
Alexis Thompson $ 400
while disbursements to vendors included
Mount Vernon Printing $5,706
B&B Duplicators $ 703
Mailboxes mailing services $ 523
Postage $ 500
InstyPrints $ 457
Accumail $ 92
For May, we have a very large payment for printing, approaching $6000, but only $592 for mailing, and no list rental.
June 1996
In June, payments to staff members and consultants included
Stuart Reges $5,511
Terry Bronson $3,041
Lisa Paley $1,547
Robert Martin $1,006
Diane Williams $ 730
Alexis Thompson $ 570
while payments to vendors included
Accumail
$5,089
Dean, Spear Associates $4,226
Mount Vernon Printing $3,713
Carlson Wagonlit Travel $3,270
Postage $1,650
D&S Mail for Less $1,481
Time Printing $ 418
There was also an expense for possible future outreach:
Interface Video (radio ad production) $702
An LNC investigation of the Browne event, conducted after I wrote the following, found that I was right as far as I went.
For June we have another $4000 in printing, over $6500 for postage, and not a penny for list rental. For the past two months, printing comes to nearly $10,000 and postage comes to nearly $8,000. There are no list rental expenses. In his 8/1/85 memo to Cloud, Ayres, Dean, and Winter, Willis asked why whenever a mailing was made to donors "Why wouldn't we also mail the same letter to the people on the LP list who haven't given to the campaign yet? We know it's going to make money (I can't imagine the LP list ever NOT making money for the Browne campaign)." Willis's memo is circumstantial evidence that the Browne campaign in doing a mailing would routinely have sent letters to most of the National Party membership. However, from February 1996 onward there are no payments to the LNC for use of the Libertarian Party list. Did Willis lose his argument, so that Browne mailed to donors but not to Libertarian Party members?
Lark's 2001 investigation answered that question.
In Total: Browne's Quest for the Nomination
Put all these reports together. What did Browne spend to capture the 1996 nomination? For July 1994-June 1996, the Browne campaign reported raising approximately $868,000 and spending approximately $818,000, leaving a shade under $50,000 on hand to launch the Fall General Election campaign. Major recipients for the two years included
People
Michael Cloud $57,083
Sharon Ayres $55,290
Stuart Reges $45,055
Harry Browne $39,021
Lisa Paley $31,449
Terry Bronson $24,605
R. E. Martin, III $22,014
Dean, Spear Assoc $20,225
J Harris Dean $ 895
Barbara Allen $ 7,322
Bill Winter $ 3,428
Diane Williams $ 3,234
Perry Willis $ 3,043
Marti Stoner $ 2,983
TOTAL $316,547
or 39% of all pre-nomination campaign spending. In addition to the above, somewhat under a dozen other people received a few thousand dollars or less each. The Campaign claimed that payments to staff included extensive reimbursements. Is this claim, on which no documentation has been presented, plausible? We'll consider this question in a few paragraphs. There were also large payments to a series of vendors, including
Accumail $76,366
Mount Vernon Printing $57,994
Carlson Wagonlit Travel $57,246
D&S Mail For Less $30,701
Libertarian National
Committee (mailing lists) $18,803
B&B Duplicating $18,176
Time Printing $16,111
Other Postage $14,178
Jack Williams(books) $ 6,884
Other Printers ca. $ 5,000
The total payments to vendors included $244,735 for printing and mailing and $57,246 for travel. It would appear that 30% or so of spending went to printing and mailing, largely to direct mail fundraising, and that 7% went to travel. These amounts do not include any reimbursements to the campaign staff for printing, mailing, travel, and other expenses. The campaign raised $868,000. By many standards, a campaign that invests primarily on direct mail fundraising and gets a 10 for 3 return on its investment is doing well.
During the first half of 1996, the campaign's spending on advertising materials that might have reached the general public was perhaps $3400, or less than 0.5% of all campaign spending for the period. I say 'might' because material of the indicated sorts was distributed at Party State conventions, primarily to loyal activists who were almost certain to vote for the Party's nominee, as well as to the general public. In the two years prior to the election, the campaign made almost no effort that cost money to bring its message to the American people. There were a few radio ads in New Hampshire, a book that did not achieve even manipulated best-seller status, and some signs and badges. So much for the campaign that Willis claimed—in 2001—that he supported because it would do outreach.
Browne did try to work the radio-talk-show circuit. However, the demographics of radio talk shows are not optimal for a Libertarian. Talk radio listeners are often older, politically active, but already committed to another political party. Hosts may convert to the Libertarian Party. What about their listeners? Many listeners who are not committed to another party are extreme conservatives, who are happy to hear about our party's fiscal freedom positions, and delighted to hear about our social freedom issues until we change the topic from gun ownership to getting Congress out of our bedrooms and medicine cabinets. It is not clear why Willis believed that Browne would be vastly more successful than Tompkins, Ohmen, or Schiff at reaching and using radio hosts during the election season, the period when most people care about politics.
Some Curious Events
An examination of the 1996 nomination Campaign's spending casts new shadows over this period. To darken the shadows, I'll quote a few numbers from later chapters:
Staff Reimbursements
We first look at aggregate spending. In 1995, the year before the 1996 nomination, the Browne Campaign spent over $60,000 for printing, over $90,000 for mailing, and over $35,000 for travel, a total of $185,000 of direct disbursements to vendors. As shown later in the book, in 1999, the year before the 2000 nomination, the campaign spent over $47,000 on printing, postage, and shipping, another $34,000 on postage and mailing services, and nearly $7400 on travel, a total of $88,000 in direct payments to vendors. Furthermore, in the first half of 1996 the Browne Campaign spent nearly $27,000 on printing, $33,555 on postage and mailing services, and $21,400 on travel. In the first half of 2000, the Browne Campaign spent slight more ($32,220) on printing, a bit less ($30,300) on postage and mailing services, and less ($17,800) on travel.
Printing, postage, and travel were the major outsourced expenditures of the 1996 campaign. For the years immediately preceding the 1996 and 2000 elections: In 1995, itemized disbursements in these areas were more than double what the Browne campaign spent in the same areas in 1999. Itemized disbursements to vendors in the first half of 1996 were slightly more than disbursements in the same areas in the first half of 2000.
This disparity between 1995 and 1999 spending, more being spent in 1995 than in 1999, is of interest because questions about conduits for Browne's 1995-1996 spending arose in another venue. In 1998, Browne's 1996 campaign co-Chair, David Bergland, was running for National Chair against the insurgent campaign of Gene Cisewski. Cisewski criticized the Browne campaign—meaning Campaign Chair Bergland—for paying its staff excessively. For example, for the first half of 1996, five staffers received disbursements at annualized rates of more than $60,000 per year. Over the two years before the nominating convention, disbursements to staff members accounted for 39% of all campaign expenses. In 1996, Bergland's spouse Sharon Ayres received more than $100,000 as campaign manager of the Browne campaign. California is a community property state. In California, if people are legally married, half of each spouse's income legally belongs to the other spouse.
Speaking in my presence, Bergland claimed that the campaign's disbursements to Ayres and others were primarily not salary. He claimed that the disbursements to staffers included a modest salary, but were mostly substantial repayments to the staffers for expenses they had shouldered when the 1996 campaign was short of cash. Bergland was at the time running for Party Chair. His wife's income from the Browne campaign was controversial. Some of Bergland's critics had suggested that Ayres was getting rich at the Party's expense. Bergland's claims about that income were important to Bergland's own campaign, because they showed Ayres was not getting rich on campaign funds. Whose claims are true? I have been unable to locate a public source detailing the alleged out-of-pocket expenses. Bergland and Ayres have not, to my knowledge, volunteered private documents, e.g., selected sections of their Income Tax Filings, W-2 forms, or the like, that would validate their claims. In 1998, neither Bergland nor his critics discussed FEC regulations that appear to restrict loans to candidates other than conventional loans made by lending institutions.
Are Bergland's statements true? In his 2001 posting to lpus-misc, LNC activist and Browne non-enthusiast Dean Ahmad repeats reports that the 1996 Browne campaign did indeed go deeply into debt in the period immediately before the election. These debts do not appear in the FEC reports, but could have been paid off by later disbursements to staffers.
Let's compare with 2000, the comparison that darkens the shadows. In contrast to the 1996 campaign, the 2000 campaign supposedly did not resort to borrowing money from its own staff and making later repayments. Sums paid to the Campaign Chair and others by the 2000 Campaign match closely the amounts that have been publicly identified by people associated with the Campaign as the salaries of the Chair and others. There is thus no room in the 2000 disbursements for large non-salary reimbursements to the campaign staff. The disbursements we see in 1999-2000 for printing and mailing are therefore very nearly the actual printing and mailing expenses of the 2000 Campaign.
Now we encounter the oddity. The 1996 campaign ran on a smaller total scale, with less money raised and spent, than the 2000 campaign. The 1996 campaign, unlike the 2000 campaign, masked some of its vendor expenses as payments to staffers. One might then expect that itemized spending by the 1996 campaign would be less than spending by the 2000 campaign in the same areas, e.g. printing and mailing. On the contrary, based on itemized disbursements in these areas the 1996 campaign outspent the 2000 campaign by massive proportions. Prior to the nomination, the 1996 campaign reported spending more than twice as much—almost $100,000 more—as the 2000 campaign for printing, postage, list rental, and travel.
How is it that in 1996 that vendors also received large-scale payments via staffers, as Bergland claimed? Did the 1996 campaign outspend the 2000 campaign by, say, $200,000 and not $100,000? At some point it becomes difficult to explain how the smaller 1996 campaign could have outspent the 2000 campaign by so much, particularly when the 1996 spending was for fundraising that ought to have enlarged the 1996 campaign.
Bergland's claim about disbursements leads to the remarkable conclusion that the 1996 campaign massively outspent the 2000 campaign in mission-critical areas of printing, postage, and travel. Is this true? Or was Bergland's claim that staff salaries were engorged by reimbursements a clever political ploy, a clever turn of phrase that was literally true but non-clarifying, all to win a party election? The record leaves one in doubt.
Campaign Mailings
We now come to the puzzle of the campaign mailings, the puzzle that was recently solved. As I noted earlier, the puzzle’s explanation raises further serious questions about the Libertarian National Committee's conduct prior to the 1996 convention. I could replace the remainder of this section with a single table and a half-dozen lines of text. I leave it in place so you will see a specific piece of forensic analysis being employed. The accuracy of the analysis was finally confirmed by direct evidence. I am being repetitive so that when you see the same forensic analysis applied to 1999 reports, you will know that the first time I used this method that the method worked.
From February to June 1996, the Browne campaign spent roughly $22,000 on printing, nearly $27,000 on postage, and $1900 for two rentals of the Liberty Publishing mailing list. Liberty Publishing advises me that their mailing list would have been in the vicinity of 7000 names, so the list rental would account for mailing around 14,000 letters. $49,000 for printing and postage implies that a far larger number of copies were mailed, perhaps in the vicinity of 125,000 (assuming 40 cents per letter). The printing and postage bills are consistent with each other, but almost nothing was spent on list rental. Where did all the addresses come from?
By comparison with Browne's 1995 FEC filings, and consistent with the Presidential nominating campaign that I advised, if Browne's February-June 1996 mailings had used rented lists, then corresponding to the $49,000 for printing and mailing would be $10,000 or a bit more for list rental, not the reported $2,000. Of course, the Browne campaign could have mailed exclusively to its own mailing list of donors, which would have cost nothing for list rental. To spend $49,000 on mailing to donors the campaign would have needed tens of thousands of donors, ten times as many as it had had in 1995 or would have in 2000. Well into the 2000 campaign Browne appears to have had more like 3000 donors. So where did Browne get the names to which his campaign paid for mailings?
In July 1996, no spending for list rental was reported. Very large sums were paid in this month to the Libertarian National Committee for 'Administrative Services'. Before the truth became known, it had been suggested to me that the Browne campaign did indeed mail regularly to the National Party list during the first half of 1996, but that it was allowed to postpone paying for those mailings until after the convention. At the time I wrote the above, the evidence for such a transaction was circumstantial. ‘Administrative Services’ could have included mailings; they could alternatively have included orthodox administrative acts.
In Fall 2001 the truth came out. I am embarrassed to note that if I had known exactly where to look, there would never have been any doubt about the question, because the requisite information was publicly available from statements filed under penalty of perjury. However, there was no rational reason to look at those statements to explore this question. After all, what was happening was a serious violation of Party rules. One might have expected that at least a modest effort would be made to disguise what had been done.
I begin with an aside. The Libertarian Party has a National Committee. That Committee has elected members, hires staff, and files with the Federal Election Commission. Some years ago, it also incorporated itself. Skipping some abstruse legal details as to whether the Libertarian National Committee elected by the National Convention and the Libertarian National Committee that is the Board of Directors of LNC, Inc. are technically one legal entity or two legal entities one of which appoints itself to be the other’s officers, there is a unitary Libertarian National Committee. Its elected members and its hired staff are not the same people, but LNC, Inc. includes both of them. The elected Committee has charge of its finances; it can't say 'we didn't do that, they did it' unless there is a record that when the staff made mistakes that these mistakes were noted and corrective actions were taken. To paraphrase the words of a distinguished writer of the last century, the elected members are not entitled to use the staff as their flak-catchers. If improprieties are judged to have occurred, they happened on the watch of the elected National Committee, which is properly judged on what it did after the impropriety was revealed.
So how was the list paid for? We now come to the truth:
The Libertarian National Committee Directly Funded Browne's Nominating Campaign
Prior to the nominating convention, LNC, Inc. directly funded Browne's nominating campaign via loans and a direct cash subsidy. The loans were for $11,185.01. The direct subsidy was for $3,333. The loans were publicly revealed, but are not remarked upon by the LNC in its published Minutes. The subsidy was only uncovered recently. I can be this exact about the loans because the loans and their purpose were reported in the FEC filings of LNC, Inc. for the first half of 1996, correctly reported on line 9 and Form D of the FEC filings as a debt owed to the LNC. The August 13, 2001 report of National Chair Lark to the LNC supplies considerable additional detail and revealed the direct subsidy.
How were the loans made? In five separate months during January-June 1996, the Browne campaign rented the LNC, Inc. mailing list. They rented it eight times. The Campaign made mailings to the LNC list. It received donations from people on the LNC mailing list.
But the Browne Campaign didn't pay for using the lists.
At least, it did not pay for the lists in advance. When the Browne campaign used the lists without promptly paying for them, the LNC did not move against Browne to collect what it was owed. Nor did it shut off further use of the lists by Browne. Instead, the LNC gave the Browne campaign a line of credit, so that Browne mailed and mailed while his debts to the LNC grew and grew. The June 1996 FEC filing of LNC shows a debt of $11,185.01 from the Harry Browne committee to the LNC for list rental. Invoices uncovered by LNC National Chair James Lark and reported to the LNC reveal the details. In a memo dated August 13, 2001, Lark reported to the LNC a series of occasions on which Browne was invoiced for the list, but was allowed to rent the list without paying immediately. Lark lists invoices from the LNC to the Browne campaign and when the debts were paid:
#1) "According to invoice, campaign rented current member list for $1766.50 (14,132 names at $125/1000 names), lapsed member list for $1785.90 (17,859 names at $100/1000 names), and paid a charge of $15.50 to FEDEX something on behalf of Michael Cloud. Invoice paid on Jan. 23, 1996.
#2) "Invoice from LP to Browne campaign for $3543.00 on Jan. 17, 1996. According to invoice, campaign rented the current member list for $833.25 (14,132 names at $62.50/1000 names), the current member list for $833.25 (14,132 names at $62.50/1000 names), the current member list for $833.25 (14,132 names at $62.50/1000 names), and the current member list for $833.25 (14,132 names at $62.50/1000 names), and paid a charge of $10.00 to FEDEX something on behalf of Michael Cloud.
#3) "Invoice from LP to Browne campaign for $1865.75 on Feb. 6, 1996. According to invoice, campaign rented current member list for $1865.75 (14,926 names at $125/1000 names)."
#4) "Invoice from LP to Browne campaign for $1937.38 on March 25, 1996. According to invoice, campaign rented current member list for $1902.63 (15,221 names at $125/1000 names), and paid charges of $21.75 and $13.00 to FEDEX something to Steve Lyons (Champion Printing in Cincinnati, OH). (Total: $1937.38)
#5) "Invoice from LP to Browne campaign for $1908.00 on April 25, 1996. According to invoice, campaign rented current member list for $1908.00 (15,264 names at $125/1000 names).
#6) "Invoice from LP to Browne campaign for $1930.88 on June 21, 1996. According to invoice, campaign rented current member list for $1930.88 (15,447 names at $125/1000 names).
#7) "The invoices from January, February, March, April, and June were paid (total: $11185.01) on July 3, 1996.
In reading this series, #1 is typical of a long series of earlier occasions on which Browne's campaign rented the list of current or former members and paid immediately for its use. #2-#6 show a series of occasions in February- June 1996 in which the Browne campaign rented the list but only paid for the list on July 3, as reported in #7. While accountants may insist on particular phrasings, the extended delayed payment is de facto a loan by the LNC to Browne. The response of the LNC to the above revelations appears in a later Chapter.
The preceding forensic analysis found a substantial discrepancy between the amounts spent on printing, mailing, and list rental. As shown in National Chair Lark's report, the discrepancy was real. Browne used the LNC mailing list, but did not pay in advance for using it, as LNC policies require. In 1999, a similar set of discrepancies appear in the campaign finance records. These discrepancies, however, have not yet been explained.
The loan to Browne has been a matter of public record for the past five years. Anyone could have found it by looking carefully at the LNC's FEC filings. To my knowledge, no one did. When I did do research (previous section) it was readily apparent that Browne was mailing letters but not renting very many mailing lists. However, at that time I did not find where the mailing list rentals were being hidden. Indeed, my estimate as to how much Browne should have been expected to spend on mailing lists was perhaps $4000 low.
In July, 1996, the Browne Campaign discharged its debt. When it paid the LNC, it reported the payment as being for 'Administrative Services', a remarkably broad phrase. The Browne campaign had reported prior payments for the LNC current member list by describing them as 'list rental'. The July 1996 payment, made for the same reason, was described as being for 'administrative services' rather than being identified as a list rental. In July 1996, Browne was already the Party's candidate for President, entitled to use the Party mailing list for free. Identifying the July 1996 payment as a 'list rental' would potentially have raised all sorts of questions.
The terms, conditions and rates under which Browne rented the LNC membership mailing list raise very serious questions about the conduct of the National Party. I have spoken to a series of Libertarians who have rented or proposed to rent lists, including 1995 supporters of an aborted Presidential campaign, two of our other Presidential candidates, and advocates of the 2002 Ed Thompson for Governor (of Wisconsin) campaign. They agree on a series of facts.
First, as noted at the start of the chapter, it has been true for a very long time that our Party's terms to list renters have been 'cash in advance'. Second, the rate for renting names and addresses of Party members has long been held at $125/1000 for the list of current Party members. 'Cash in advance' and '$125/1000 names' are very different from the conditions given Browne by the LNC. The National Party allowed Browne to delay paying for use of its list until he received the nomination months and months later. I have thus far found no other candidate who was allowed to rent first and pay later.
When the National Party let Browne delay payment, it effectively presented Browne with an interest-free loan from the National Party, a loan given no other candidate. The loan was half-secret. LNC, Inc. disclosed in its FEC reports that it had obligations from the Browne campaign. The Browne Campaign failed to acknowledge in its FEC reports that it was in debt to LNC, Inc.
The LNC has a standard rate for renting mailing lists. That rate was in use in Fall 2001; I have found Libertarians who recall the same rate in 1993. If you look at #1-#6 above, you will find this rate in use. The list of current members costs $125 per 1000 names to rent. Well, it costs $125/1000 names, unless it is February 1996 and you are Harry Browne. See #2) above. In 1996, the Browne Campaign was allowed to pay $62.50/1000 to rent the list. Effectively, the Browne Campaign did not have to pay for half of each of four list rentals, a gift to the campaign from the National Committee of an additional $3333.
The elected Libertarian National Committee did not, according to its minutes, approve any loans to Presidential aspirants. Nor did it approve giving the Browne campaign $3333 as a gift in kind via special discounts for list purchases. Nonetheless, Browne was given special terms by the National Office. He rented the mailing list and did not pay immediately. He rented the list repeatedly and was charged only half the customary rate.
The Party's Conflict of Interest rules explicitly forbid the National Party's staff to support pre-nomination Presidential campaigns with party resources. Browne was given a line of credit. Browne was given a direct subsidy for rentals of the LNC mailing list. Those gifts were support for Browne's campaign with LNC resources. Browne was even allowed to keep his line of credit in May, 1996, a month in which the LNC reported $208,108.40 in debts and obligations owed by the LNC, and only $1,469.90 in cash on hand. Other campaigns did not receive similar help from the LNC.
Why didn't the National Committee notice that it had loaned Browne's Campaign $11,185.01 and effectively given the campaign $3333, acts contrary to its own fixed policy? It would appear that they didn't notice on their own, and no one told them. The loans, though not the gift, were on the record with the FEC, so information was there if someone thought to look.
For this failure, criticism must go in the first instance to National Treasurer Hugh Butler. Criticism must go in the second instance to Party Chair and CEO Steve Dasbach. The loans happened on their watch; they did not notify the National Committee that there had been deviations from standard policy. Blame must further go to the entire National Committee. The loans were disclosed on the National Committee's FEC reports, which are publicly available. Did National Committee members fail to consult the record? Or did they remain silent about a use of Party resources to support their preferred candidate? Answers to these questions are difficult to determine.
Finally, there were almost certainly staff members who knew about the loan, but who failed to raise the issue with their employers. The one staff member who surely must have known about the loan was the Party's Assistant Treasurer, the man who signed the FEC Disclosure forms. Who was that one staffer? It was Browne's paid man on the LNC Staff...
Perry Willis.
The fox had been put in charge of guarding the chicken coop.
Similar questions may also be raised about the $3333 that the LNC presented as a gift in kind to the Browne campaign. Who was at fault? Once again, blame must go in the first instance to National Committee Treasurer Butler and National Committee Chair Dasbach. Unlike the loan, the gift in kind was not disclosed on the FEC reports. Browne is shown on the reports as having been billed for mailing list rentals, but there was no disclosure that the lists were provided in part via gifts in kind from the National Committee. It would therefore have been much harder for the full LNC to learn via independent investigation about the gift in kind.
The $11,185.01 the LNC loaned to Browne in 1996 and the $3333 the LNC gave Browne were only the first two installments on the huge de facto financial support soon to be given Browne by the LNC for his 2000 nominating campaign.
The Party Staff and the National Committee
In June 1996, there was a contested election for Party National Chair. Steve Dasbach was challenged by Gene Cisewski. Disturbing features of the election include repeated reports from a variety of sources that members of the National Party's staff involved themselves in internal Party elections. For example, in a letter dated January 20, 1997, long-time Pennsylvania activist and donor Mike Nixson wrote "Perry Willis made it clear to many individuals that he would resign if Gene Cisewski defeated Steve Dasbach." Nixson emphasizes that these statements were made before the National Convention, when they might have influenced the election.
On Friday, August 17 2001 long-time activist John Slevin made a disclosure to National Chair James Lark about "fraud or related unacceptable practices" related to the National Party. Slevin began by noting that he had first registered with the Party in 1979 and did professional ballot access work, always at a much reduced rate for Libertarians. Slevin reports that he visited National Headquarters the week before the 1996 convention and personally witnessed that most staff members he saw—'most' specifically not including Perry Willis—were wearing 'Dasbach' [for Chair] buttons. Slevin emphasizes that to his knowledge Dasbach was out of town, that when he returned to the headquarters after Dasbach's return the buttons were no longer in sight, and that he was informed that when Dasbach had learned of the buttons he had ordered staffers to remove them.
Nonetheless, Party members should recognize that repeated hints that the National Staff is attempting to influence internal party elections potentially form a dangerous pattern. Once an organization has a paid staff, there is a natural tendency for the paid staff—not in every case, but often enough—to seek to influence or control the direction of the organization. Not uncommonly, the directions include hiring more staff rather than using outsourcing. We saw one recent proposal that the current Strategic Plan should be implemented by hiring more staff for the National Headquarters. These directions often point less at advancing the organization's objectives and more at advancing the conditions of work of the staff and the numbers of subordinates of senior staffers. An early firewall against this hazard is an announced and rigidly enforced rule that the staff may not attempt to influence internal politics. There are indications for 1996 that the firewall was under stress.
The End of the Trail
We reach July 1996. The Libertarian National Convention met in Washington, D.C. Harry Browne was nominated by the Libertarian Party as its candidate for President; he won on the first ballot. His running mate would be Jo Jorgensen, a Carolina businesswoman.