To: Press Corps From: Hari Sevugan, National Press Secretary, Democratic National Committee Date: April 7, 2010 RE: ŽďŚƌůŝĐŚ͛ƐŶƐǁĞƌŽŶDŝĐŚĂĞů^ƚĞĞůĞ͛ƐŽŵƉĞƚĞŶĐĞƚŚĂƚtŝůů^ƉĞĂŬƚŽ,ŝƐKǁŶ:ƵĚŐŵĞŶƚ

Does Bob Ehrlich still feel that MichĂĞů^ƚĞĞůĞ͛ƐŵĂŶĂŐĞŵĞŶƚŝƐƐŽƵŶĚĞŶŽƵŐŚƚŽƌƵŶƚŚĞƐƚĂƚĞ͍

In the wake of recent news of Steele's penchant for private jets, profligate spending on office redecorating and bondage-ƚŚĞŵĞĚƐĞdžĐůƵďƐ͕DĂƌLJůĂŶĚĞƌƐƐŚŽƵůĚŶ͛ƚďĞƐƵƌƉƌŝƐĞĚĂƚƚŚĞĨŽƌŵĞƌ- LieutenaŶƚ'ŽǀĞƌŶŽƌ͛ƐƋƵĞƐƚŝŽŶĂďůĞƐƉĞŶĚŝŶŐƉƌĂĐƚŝĐĞƐ͘tŚŝůĞŚŝƐĐŽŶĚƵĐƚĂŶĚĐŽŵƉĞƚĞŶĐŝĞƐĂƐƚŚĞ head of the Republican Party have come under intense criticism from Republican leaders and scrutiny from the media, what does that say about the judgment of Bob Ehrlich - the man most responsible for his rise?

It was Bob Ehrlich that first placed Michael Steele in a position of responsibility. ŚƌůŝĐŚ͛ƐƐĞůĞĐƚŝŽŶŽĨ ^ƚĞĞůĞĂƐĂƌƵŶŶŝŶŐŵĂƚĞƐƵŐŐĞƐƚƐŚĞƚŚŽƵŐŚƚ^ƚĞĞůĞ͛ƐŵĂŶĂŐĞŵĞŶƚƐŬŝůůƐǁĞƌĞŐŽŽĚĞŶŽƵŐŚƚŽƌƵŶƚŚĞ state if needed. Given what we know now about how Steele runs an operation and that even far right ZĞƉƵďůŝĐĂŶƐĂƌĞƵƌŐŝŶŐĚŽŶŽƌƐƚŽďŽLJĐŽƚƚ^ƚĞĞůĞ͛ƐZĞƉƵďůŝĐĂŶEĂƚŝŽŶĂůŽŵŵŝƚƚĞĞ͕Ehrlich͛s choice of Steele seems to be a poor decision in hindsight.

,ŽǁĞǀĞƌ͕ƋƵĞƐƚŝŽŶƐŽŶ^ƚĞĞůĞ͛ƐƐƉĞŶĚŝŶŐƉƌĂĐƚŝĐĞƐĂƌĞŶŽƚůŝŵŝƚĞĚƚŽŚŝƐƚĞŶƵƌĞĂƐZEŚĂŝƌŵĂŶ͘/Ŷ 2006, Steele paid a company owned by his sister $37,000 after it had already closed. And in the closing weeks of the 2006 election, more than $400,000 was paid out from Republican campaign committees, including those of Bob Ehrlich and Michael Steele, to a commodities trading firm owned by the same ŵĂŶǁŚŽĞĂƌůŝĞƌƚŚĂƚLJĞĂƌǁŽŶĂƉƉƌŽǀĂůĨƌŽŵŚƌůŝĐŚ͛ƐĚŵŝŶŝƐƚƌĂƚŝŽŶƚŽĞdžƉĂŶĚĂůƵĐƌĂƚŝǀĞŶĞǁƐƐƚĂŶĚ vendiŶŐŽƉĞƌĂƚŝŽŶĂƚĂůƚŝŵŽƌĞ͛Ɛt/ĂŝƌƉŽƌƚ͘

^ƚĞĞůĞ͛ƐŝŶĂďŝůŝƚLJƚŽƉƌŽƉĞƌůLJƌƵŶƚŚĞZEƌĂŝƐĞƐƚŚĞƋƵĞƐƚŝŽŶŽĨŽďŚƌůŝĐŚΖƐũƵĚŐŵĞŶƚǁŚĞŶŚĞƉƵƚ Michael Steele in a position to run an entire state. Bob Ehrlich owes Marylanders an answer on whether he stands by that judgment. Does he agree with Republican donor Tony Perkins, former Vice- WƌĞƐŝĚĞŶƚŝĂůĐĂŶĚŝĚĂƚĞ^ĂƌĂŚWĂůŝŶĂŶĚŚŝƐǁŝĨĞ͕<ĞŶĚĞůŚƌůŝĐŚ͕ƚŚĂƚ^ƚĞĞůĞƐŚŽƵůĚŶ͛ƚďĞƚƌƵƐƚĞĚǁŝƚŚ their confidence?

IMPROPER PAYMENTS FROM STEELE AND EHRLICH CAMPAIGNS

4XHVWLRQV5DLVHG2Q0RUH7KDQ3DLG2XW7R$3ULQFH*HRUJH¶V&RXQW\)LUP )URP6HYHUDO5HSXEOLFDQ$FFRXQWV,QFOXGLQJ6WHHOH$QG(KUOLFK¶V,QThe questions the I-Team is raising center on more than $400,000 paid out from several Republican accounts in the closing weeks of the 2006 campaign. The firm's Web site said it was in the business of trading commodities, such as minerals, metals, coffee and sugar. But the campaign payments it received, according to the candidates' accounting, were for a wide range of other activities, according to campaign filings. Between Sept. 7, 2006, and Nov. 1, 2006, Ehrlich's campaign paid Allied Berton more than $229,000, which included expenses described as food and transportation, salaries, compensation and rent, I-Team lead investigative reporter Jayne Miller said. The firm got one payment in the amount of more than $73,000 from the campaign account of Ehrlich's running mate, Kristen Cox. That expense was listed as media. A payment of $50,000 went to the firm from the state's Republican party. It listed the expense as vehicle rentals and volunteers, Miller reported. Steele's Senate campaign made four payments to Allied Berton in October and November 2006 totaling more than $64,000. Each of those expenses was listed as political consulting, according to campaign filings."I would make of this being a little hinky," said Professor Don Norris, the director of the Institute for Policy Analysis at the University of Maryland, Baltimore County. [WBAL, 2/26/09]

¾ The Firm Is Run By Sandy Roberts, Who O rganized A Big Party For Steele In New York During The Republican National Convention And Who Got Approval F rom The Ehrlich Administration To Expand A Different Business Needed To Set Up Shop As A Minority Business Enterprise At The Airport. ³7KHPDQEHKLQG$OOLHG%HUWRQLV6DQG\ Roberts. Miller reported he does have political connections. In 2004, he organized a big party for Steele in New York during the Republican National Convention. Earlier that same year, Roberts got approval from the Ehrlich administration to expand a different business needed to set up shop as a minority business enterprise at the airport. Roberts is co-owner of Olympic News, which has several outlets at BWI Airport. News stands are regarded as one RIDQDLUSRUW VPRVWOXFUDWLYHEXVLQHVVHV0LOOHUUHSRUWHG´>:%$/-TV, 2/26/09]

0LFKDHO6WHHOH¶V)LQDQFH&KDLUPDQ$ODQ)DELDQ)URP+Ls 2006 Campaign Claimed That 6WHHOH0DGH,PSURSHU3D\PHQWV7R+LV6LVWHU¶V'HIXQFW%XVLQHVV³6WHHOHZKRZDV 0DU\ODQG¶VOLHXWHQDQWJRYHUQRUIURPWRVDLGWKHFODLPRILPSURSHUSD\PHQWVWRKLV VLVWHU¶VGHIXQFWEXVLQHVVDQGRWKHUDOOHJDWLRQVUHSRUted Saturday in The Washington Post were OHYHOHGE\DµFRQYLFWHGIHORQ¶DQGDUHµDOOIDOVH¶7KHPDQEHKLQGWKHDOOHJDWLRQVLV$ODQ% Fabian, a once-ZHDOWK\*23IXQGUDLVHUZKRZDVILQDQFHFKDLUPDQIRU6WHHOH¶V6HQDWHUXQ Fabian, 44, made the claims last \HDUGXULQJSOHDQHJRWLDWLRQVZLWKWKH86DWWRUQH\¶VRIILFHLQ Maryland after he was charged with orchestrating multimillion-dollar frauds unrelated to the campaign, according to a confidential court document. Hoping prosecutors would recommend a lighter sentence, Fabian provided them with information about Steele and said he would be willing to testify against him, according to the document, a sentencing memorandum prepared by Fabian's attorney and filed under seal in the fall before Fabian's sentencing in federal court. The U.S. attorney's office did not recommend a shorter prison term, and Fabian was sentenced in 2FWREHUWRQLQH\HDUVEHKLQGEDUV´>:DVKLQJWRQ3RVW2/9/09]

¾ Fabian Said That Steele Used Campaign Funds Improperly, Including Paying $75K To A Law Firm For Work That Was never Performed And More Than $37K To A Company Owned By His Sister. ³,QWKHGHIHQVHPHPRUDQGXP)DELDQFLWHGIRXUVSHFLILF transactions. In addition to the payment to Steele's sister, Fabian said that the candidate used money from his state campaign improperly, that Steele paid $75,000 from the state campaign to a law firm for work that was never performed and that Steele or an aide transferred more than $500,000 in campaign cash from one bank to another without authorization. Curt Anderson, a spokesman for Steele, said the payments from Steele's state campaign fund were proper. In the case of the law firm, Baker & Hostetler, it was paid $75,000 for earlier work on a redistricting challenge in Maryland, according to Anderson and a lawyer who worked on the case. In the case of the bank transfer, Steele had authority over the account in question, Anderson said. The payment to Steele's sister was the focus of questions yesterday. Campaign records indicate that $37,262 paid to Brown Sugar Unlimited covered catering and Web services. But it came 11 months after Turner, a pediatrician who lives in Potomac, had legally dissolved the compaQ\´>:DVKLQJWRQ3RVW2/9/09]

¾ 6WHHOH¶V6LVWHU2SHQHG+HU&RPSDQ\,Q$V$Q,QYHVWPHQW&RPSDQ\$QG&ORVHG The Business In March 2006 Before It Was Paid In 2007 For Web And Catering Services. ³7KH)%,FRQILUPHG\HVWHUGD\WKDWLWLVLQYHVWLJDWLQJFODLPVRIFDPSDLJQILQDQFH fraud during Michael S. Steele's 2006 Senate bid, amid fresh questions about the propriety of campaign payments to his sister's defunct company. Steele's sister, Monica Turner, founded Brown Sugar Unlimited LLC in late 2003 as an investment company, according to State Department of Assessments and Taxation documents. She closed the business in March 2006. Federal election records show Steele's Senate campaign paid Brown Sugar more than $37,000 in 2007 for Web and catering services that were performed after the company had VKXWGRZQ0DU\ODQGODZSURKLELWVGHIXQFWFRPSDQLHVIURPSHUIRUPLQJVHUYLFHV´>%DOWLPRUH Sun, 2/10/09]

STEELE HAS FACED CRITICIZM FOR HIS ETHICAL LAPSES AND OUTLANDISH SPENDING PRACTICES WHILE AT THE RNC

Steele Profited Off Of Speeches He Made To Colleges, Trade Associations And Other Groups :KLOH51&&KDLU$³8QXVXDO3UDFWLFH&ULWLFL]HG%\$6WULQJ2I3DVW3DUW\&KDLUPHQ´³0LFKDHO6 Steele, Republican National Committee chairman, is using his title to market himself for paid appearances nationwide, personally profiting from speeches with fees of up to $20,000 at colleges, trade associations and other groups - an unusual practice criticized by a string of past party chairmen. Mr. Steele, elected in January to the $223,500-a-year RNC post, is working with at least four outside agencies in Washington, New York, Boston and Nashville that book the speaking engagements. He charges between $8,000 and $20,000 for an address, plus first-FODVVWUDYHODQGORGJLQJH[SHQVHV´>:DVKLQJWRQ7LPHV12/22/09]

Steele Spent Almost $400,000 To Win The RNC Chairmanship Aided In Part By Consultants Who Rely On The RNC For Business. ³5HSXEOLFDQ1DWLRQDO&RPPLWWHHFKDLUPDQ0LFKDHO6WHele spent nearly $370,000 to win a contentious election in January, aided in part by consultants who rely on the RNC for business. In filings made late Friday with the Internal Revenue Service, Steele reported spending $369,023 since kicking off his bid for chairman in the fall of 2008, more than any of the other five FDQGLGDWHVZKRVRXJKWWKHFKDLUPDQVKLS«The former Maryland lieutenant governor and GOPAC chairman relied heavily on close friends, including executives at an oil services company in Nebraska. Everston International Venezuela and Everston Operating Company, which share a P.O. Box in Kimball, Neb., each gave Steele's campaign $25,000. Florida Republican Party chairman Jim Greer gave Steele $15,000 after endorsing the Marylander's campaign in eDUO\-DQXDU\´>7KH+LOO7/31/09]

RNC Chair Michael Steele Paid His Personal Assistant Nearly Three Times More Than Her Predecessor. ³:KHQ0Lchael S. Steele took over as chairman of the Republican National Committee earlier this year, he brought along longtime personal assistant Belinda Cook and gave her a salary nearly three times what her predecessor made. Mrs. Cook's son, Lee, also landed an RNC job. Mr. Steele hired another family friend, Angela Sailor, to be the party's outreach director at a salary of $180,000, more than double her predecessor's compensation, though new responsibilities have been added to the job, according to a high-ranNLQJ51&RIILFLDODQG)HGHUDO(OHFWLRQ&RPPLVVLRQ )(& ILOLQJV«%XWPDQ\ complaints will focus on staff compensation. Some party officials have said that the salaries appear generous compared with those paid for similar positions under previous RNC head Robert M. "Mike" 'XQFDQ´>:DVKLQJWRQ7LPHV5/19/09]

Steele Was Criticized For Spending RNC Funds To Remodel His Capitol Hill Office As Other Pressing Matters Languished. "As criticism of Steele from within Republican ranks has grown in recent GD\VVRPH*23LQVLGHUVDUHJUXPEOLQJWKDWWKHQHZ51&OHDGHUKDVVSHQWVRPHRIWKHRUJDQL]DWLRQ¶V scant cash to remodel his Capitol Hill office, even as other pressing matters languish, like filling top staff SRVLWLRQV5HSXEOLFDQVRXUFHVFRQILUPWKDW6WHHOH¶VRIILFHKDVLQGHHGEHHQVSUXFHGXSZLWKIUHVK wallpaper and a new desk. However, these GOP sources dispute accusations that Steele is spending lavishly WRFRPSOHWHO\RYHUKDXOKLVRIILFH+2+KDVXQFRYHUHGPRUHHYLGHQFHWKDW6WHHOHLVQ¶WSODQQLQJ to go anywhere ² LQIDFWKH¶VJHWWLQJTXLWHFRPIRUWDEOHLQKLVQHZRIILFH6RXUFHVVD\D%RZIOH[H[HUFLVH machine recently arrived at RNC headquarters, presumably for the chairman to work on those abs of Steele." [Roll Call, 3/16/09]

RNC Members Called On A Resolution That Calls For A New Set Of Checks And Balances On &KDLUPDQ6WHHOH¶V3Rwer To Dole Out Money. ³$EDWWOHRYHUFRQWURORIWKHSDUW\ VSXUVHVWULQJVKDV erupted at the troubled Republican National Committee, with defenders of Chairman Michael S. Steele DFFXVLQJGLVVLGHQW51&PHPEHUVRIWU\LQJWRµHPEDUUDVVDQGQHXWHU¶WKHSDUW\ s new leader. Randy Pullen, the RNC's elected treasurer, former RNC General Counsel David Norcross and three other former top RNC officers have presented Mr. Steele with a resolution, calling for a new set of checks and balances on the chairman's power to dole out money. The powers include new controls on awarding FRQWUDFWVDQGVSHQGLQJPRQH\RQRXWVLGHOHJDODQGRWKHUVHUYLFHV´>:DVKLQJWRQ7LPHV4/29/09]

:3³51&0RYH6HHQ$V%LG7R5HLQ,Q&KDLUPDQ´³$JURXSRI5HSXEOLFDQ1DWLRQDO&RPPLWWHH members is circulating a resolution that would limit how much Chairman Michael S. Steele could spend without authorization from other party leaders, a move some Steele backers say is an attempt to limit the DXWKRULW\RIWKHVRPHWLPHVFRQWURYHUVLDOFKDLUPDQ´>:DVKLQJWRQ3RVW4/30/09]

^d>͛^>s/^,WWd/d/E/ZTRAVEL SHOWS A LACK IN JUDGEMENT

Steele Is Spending Twice As Much As Recent Predecessors On Private Planes And Paying More For Limos, Catering And Flowers ± ([SHQVHV7KDW$UH,QIXULDWLQJ7KH3DUW\¶V0DMRU Donors. ³5HSXEOLFDQ1DWLRQDO&KDLUPDQ0LFKDHO6WHHle is spending twice as much as his recent predecessors on private planes and paying more for limousines, catering and flowers ± expenses that are infuriating the party's major donors who say Republicans need every penny they can get for the fight to win back Congress. Most recently, donors grumbled when Steele hired renowned chef Wolfgang Puck's local crew to cater the RNC's Christmas party inside the trendy Newseum on Pennsylvania Avenue, and then moved its annual winter meeting from Washington to Hawaii.´>3ROLWLFR2/23/10]

Steele Once Raised The Possibility Of Using Party Money To Buy A Private Jet. ³$FFRUGLQJWR two knowledgeable sources, Republican National Committee chairman Michael Steele once raised the SRVVLELOLW\RIXVLQJSDUW\PRQH\WREX\DSULYDWHMHWIRUKLVWUDYHOµ,NQRZWKDW«UHJXODURQJRLQJXVHRI SODQHVZDVVRPHWKLQJWKDWZDVORRNHGDW¶VD\VRQHSHUVRQZLWKGLUHFWNQRZOHGJHµ,FDQ¶WVSHDNWRKRZ sHULRXVWKRVHLQTXLULHVZHUH¶%RWKVRXUFHVVD\6WHHOHFRQVLGHUHGSXUFKDVLQJDSODQHRXWULJKWRUEX\LQJ IUDFWLRQDORZQHUVKLSLQRQHWKURXJKDFRPSDQ\VXFKDV1HW-HWV«2QFHRQWKHJURXQG)(&ILOLQJV suggest, Steele travels in style. A February RNC trip to California, for example, included a $9,099 stop at the Beverly Hills Hotel, $6,596 dropped at the nearby Four Seasons, and $1,620.71 spent [update: the amount is actually $1,946.25] at Voyeur West Hollywood, a bondage-themed nightclub featuring topless ZRPHQGDQFHUVLPLWDWLQJOHVELDQVH[´>'DLO\&DOOHU3/29/10]

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