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MOST CORRUPT: REPRESENTATIVE PAUL BROUN Representative Paul Broun (R-GA) Is a Three-Term Member of Congress, Representing Georgi

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MOST CORRUPT: REPRESENTATIVE PAUL BROUN Representative Paul Broun (R-GA) Is a Three-Term Member of Congress, Representing Georgi MOST CORRUPT: REPRESENTATIVE PAUL BROUN Representative Paul Broun (R-GA) is a three-term member of Congress, representing Georgia’s 10th congressional district. His ethics issues stem from his failure to disclose the true source and terms of his campaign loans. Failure to Disclose Source of Campaign Loans In 2007, while running as a candidate in a special election to represent Georgia’s 10th congressional district, Rep. Broun began making loans to his campaign committee, the Paul Broun Committee.1 In reports filed with the Federal Election Commission (FEC) in 2007 and 2008, Rep. Broun’s committee said it received six separate loans totaling $309,000 over more than a year.2 The campaign told the FEC the source of these loans was Rep. Broun’s own personal funds, and said the loans carried no interest.3 In these FEC reports, Rep. Broun’s campaign did not file any Schedule C-1 forms, which provide information about the source and terms of campaign loans.4 These forms must be filed if the source of the loan was a lending institution, or if a candidate obtains a bank loan or a loan based on the candidate’s credit and those funds are used in connection with the candidate’s campaign.5 The campaign reported paying down the outstanding loan balances over the next four years, ultimately paying the last of them off on February 25, 2011.6 However, in February 2010, despite continuing to tell the FEC that the loans carried no interest, the campaign curiously began making what its FEC filings described as “loan interest” payments to Rep. Broun. Between February 1, 2010 and April 8, 2011, the campaign reported making eight such “loan interest” 7 payments to Rep. Broun, totaling $30,201.46. These payments did not appear to follow any 1 http://www.washingtonpost.com/politics/paul-broun-r-ga/gIQAvnbPAP_topic.html; Paul Broun Committee, FEC Form 3 2007, April Quarterly Report, Amended, November 9, 2007. 2 Id.; Paul Broun Committee, FEC Form 3, Pre-Special Election Report, Amended, November 9, 2007; Paul Broun Committee, FEC Form 3, July Quarterly Report, Amended, November 9, 2007; Paul Broun Committee, FEC Form 3, Post Runoff Election Report, Amended, November 9, 2007; Paul Broun Committee, FEC Form 3, 12 Day Pre- Primary Election Report, July 3, 2008. 3 Paul Broun Committee, FEC Form 3, October Quarterly Report, October 15, 2008; Paul Broun Committee, FEC Form 3, 12 Day Pre-Primary Election Report, July 3, 2008; Paul Broun Committee, FEC Form 10, 24-Hour Notice Of Expenditure From Candidate’s Personal Funds, July 12, 2007; Paul Broun Committee, FEC Form 10, 24-Hour Notice Of Expenditure From Candidate’s Personal Funds, June 8, 2007. 4 Paul Broun Committee, FEC Form 3, 2007-2011 Reports. 5 11 C.F.R. §§ 104.3(d)(1), (4); Federal Election Commission, Instructions for Form 3 and Related Schedules, February 2009. 6 Paul Broun Committee, FEC Form 3, 2007-2011 Reports. 7 Paul Broun Committee, FEC Form 3, 2009 Year-End Report, January 29, 2010; Paul Broun Committee, FEC Form 3, April 2010 Quarterly Report, April 14, 2010; Paul Broun Committee, FEC Form 3, 12 Day Pre-Primary Election Report, July 8, 2010; Paul Broun Committee, FEC Form 3, October 2010 Quarterly Report, October 13, 2010; Paul regular payment schedule, and were of varying amounts. In addition, the campaign reported making its final interest payment to Rep. Broun more than a month after it reported paying off the last loan.8 In March 2012, CREW released its Family Affair report, which questioned the interest payments to Rep. Broun.9 Directly contradicting what his campaign had reported to the FEC about the source of the loans, Rep. Broun told the Athens Banner-Herald the interest his campaign paid on the loans went to a bank that had loaned him the money.10 Rep. Broun did not disclose any additional information about the bank loan or its terms. On April 11, 2012, CREW filed an FEC complaint against Rep. Broun, his campaign committee, and his campaign treasurer, seeking an investigation into their failure to disclose the true source of the loans.11 In response to the complaint, Rep. Broun’s former campaign treasurer, Tim Echols, said he had outsourced the FEC filings and couldn’t remember where the loan originally came from.12 In addition, Rep. Broun’s spokeswoman, Meredith Griffanti, said the inaccurate filing was due to “an inexperienced staffer who made a simple error when it came to providing details about the loan.”13 Ms. Griffanti said the loan was a home mortgage from Athens First Bank & Trust, with interest charged at “the standard market rate at the time,” though she did not give the rate.14 She also promised the congressman was “taking the necessary steps to file amendments and correct the whole oversight.”15 Rep. Broun himself later claimed he and his committee made a “simple mistake” in filing and they were “taking steps to resolve it.”16 On June 26, and June 27, 2012, more than five years after it began receiving the loans, Rep. Broun’s campaign committee filed amendments to six campaign finance reports. The amendments reported new information about two of the previously reported loans and disclosed 17 for the first time the existence of two more loans, but did not clear up all the questions. Broun Committee, FEC Form 3, 2010 Year End Report, January 31, 2011; Paul Broun Committee, FEC Form 3, 2011 July Quarterly Report, July 15, 2011. 8 Paul Broun Committee, FEC Form 3, 2011 April Quarterly Report, April 15, 2011; Paul Broun Committee, FEC Form 3, 2011 July Quarterly Report, July 15, 2011. 9 For more information, see Family Affair, available at http://www.citizensforethics.org/familyaffair. 10 Blake Aued, Report: Broun Gained Personally from Campaign Contributions, Athens Banner-Herald, March 22, 2012. 11 Complaint filed with the Federal Election Commission by Citizens for Responsibility and Ethics in Washington, April 11, 2012. 12 Blake Aued, Broun Accused of Breaking Campaign Finance Laws, Athens Banner-Herald, April 12, 2012. 13 Group Accuses Broun of Campaign Finance Violations, Associated Press, April 13, 2012. 14 Blake Aued, Broun Spokeswoman: Ethics Complaint Was Result of an Oversight, Athens Banner-Herald, April 13, 2012. 15 Associated Press, Apr. 13, 2012. 16 Blake Aued, Broun Challenger Promises Action, Not Words, Athens Banner-Herald, June 23, 2012. 17 Paul Broun Committee, FEC Form 3, 2007 July Quarterly Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2007 Post-Runoff Election Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2007 October Quarterly Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2007 Year End Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2008 April Quarterly Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2010 Pre-Primary Election Report, Amended, June 27, 2012. Rep. Broun’s committee had previously reported receiving a $34,000 loan from Rep. Broun on June 6, 2007 and another $80,000 loan from Rep. Broun on July 10, 2007, and claimed the loans were from Rep. Broun’s personal funds.18 The amendments, however, asserted the actual source of the funds was a home equity line of credit from Athens Bank & Trust to Rep. Broun with an interest rate of 5.99 percent.19 According to the amendments, Rep. Broun then lent the money to his campaign with no interest owed.20 The amended reports also showed a previously undisclosed $65,000 loan from Rep. Broun to his campaign on June 4, 2007.21 Like the other loans, this one was funded by the Athens Bank & Trust home equity line of credit at a 5.99 percent interest rate.22 Rep. Broun’s committee also amended a July 2010 FEC filing, disclosing for the first time a $142,766 loan from Rep. Broun to the committee.23 In the same filing, the committee reported a loan for almost the same amount to Rep. Broun from Athens Bank & Trust based on the home equity line of credit at a 6 percent interest rate, and said it was a restructuring of this line of credit.24 The filing, however, did not explain how this loan is related to the other loans based on the home equity line of credit. Rep. Broun’s other FEC reports provide no additional information about this loan. Although candidate committees must disclose outstanding loans in all filings, none of Rep. Broun’s other FEC reports, including the amendments, mention this loan. Status of Investigation The status of the FEC’s investigation is pending. Potential Violations Campaign Finance Disclosures The Federal Election Campaign Act and FEC regulations require candidates for Congress to disclose information about loans to their campaigns.25 FEC regulations specifically require that when a candidate obtains a loan derived from a home equity line of credit for use in connection with his or her campaign, the campaign committee must file a Schedule C-1 form disclosing the loan, its date, amount, and interest rate, the name and address of the lending institution, and the types and value of collateral or other sources of repayment that secure the 26 loan. A campaign committee also must disclose all outstanding loans, including the identity of 18 See, e.g., Paul Broun Committee, FEC Form 3, October Quarterly Report, October 15, 2008; Paul Broun Committee, FEC Form 3, Post Runoff Election Report, Amended, November 9, 2007. 19 Paul Broun Committee, FEC Form 3, 2007 July Quarterly Report, Amended, June 26, 2012; Paul Broun Committee, FEC Form 3, 2007 Post-Runoff Election Report, Amended, June 26, 2012.
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