Funding Liberty! Table of Contents
Funding Liberty!
Chapter 14
Browne’s Campaign Went Broke, It Claimed
April 2000
On April 24, 2000, the Browne Campaign made a surprise announcement: It was out of cash, with $83,343 in bills it could not pay. If Party members did not open their checkbooks, the campaign would have to shut its doors. Either the Browne campaign got a serious cash infusion immediately, or the Campaign would shut down forever. It would collapse without even reaching the National Convention. In 2001, Willis was to make the same claim about the Browne Campaign's predicament in late 1995—a cash flow crisis threatened to shut down the campaign. Willis's April 2000 scare tactic generated a short-lived spike in giving, but the campaign's April income was still smaller than the income it received in February or June.
According to its FEC reports, on the very day that the Campaign claimed that it had a financial crisis, it also paid Campaign Manager Perry Willis $1000 for 'campaign management'. On the very same day, FEC reports indicate that the Campaign paid Willis's brother and campaign staffer Steve Willis $1000 for 'phone, office, and salary'. When a political campaign is short of cash, it is unusual to put the campaign chair first in line to be paid, the chair's brother second in line to be paid, and outside vendors later in line to be paid.
Was the financial crisis real, or was it a fundraising stunt?
The Campaign's claim of more than $83,343 in "unpaid bills" on April 24 is not obviously consistent with its FEC report for April, as filed under penalty of perjury on May 23, 2000. Spending from April 24th through the end of the month came to $8500, including $2000 to the Willis brothers and $5000 to the PC Trust associated with the Browne Campaign's never-filed lawsuit against the FEC. The PC Trust was a legitimate investment, but it was not a debt that could force a campaign shutdown. FEC reports show the Campaign ending April with exactly $1000 in loans, debts, and obligations owed by the Campaign. Combining the end-of-month debt with any debt reduction between April 24 and the end of the month, the debt on the 24th could not have been more than $10,000—according to the campaign's own FEC reports. A debt of $10,000 is far less than the $83,343+ debt the Campaign claimed.
Allowing that the reported spending all discharged campaign debt, no less than $73,000 in alleged debt simply vanished between April 24 and the end of the month. Where did it go? Perhaps the FEC report was incomplete. There have been suggestions that the Campaign was using an accounting standard that did not report all debts on the FEC reports. However, in December 2000 the Campaign claimed it had another $100,000 of debt. The Libertarian National Committee noted that no debt appeared on the FEC reports. Perry Willis immediately agreed that the Campaign's end-of-year FEC filing needed to be amended to show those debts. Willis's standard was clearly that FEC reports were supposed to show all debt, not just some debt. Applying the same standard to the report filed on May 23, that report must therefore also be taken to report all debt.
Curiously, despite promises to the Libertarian National Committee, no amendment to the late-2000 FEC filings was made. Perhaps the debt joined the $750,000 in cash and pledges that Kristin Overn's letter of Fall 1999 said was reserved for 2000 expenses. That $750,000 cannot be found in FEC reports for 1999 or 2000. Where did it go? There has never been an independent, public audit of the Browne campaign's finances as read against its fundraising statements.
There is another way to analyze the campaign's finances, based on limited available information. FEC filings show the date and amount of every expenditure. The direct record of donations, as correctly reported to the FEC, is not complete. FEC filings only include donation dates for large donors. Small donations are reported as a monthly aggregate. You can't calculate from FEC reports a campaign's day by day cash on hand.
For the month, the Campaign spent just under $60,000 before it claimed a financial crisis, and $8500 afterwards. The campaign began April with more than $6000 cash on hand, raised $107,000, and closed the month with $45,000 cash on hand. Through April 24, almost $16,000 in large donations was received; in the last six days of the month, the campaign received $30,000 in large donations. For the whole month, smaller donations amounted to more than $60,000.
If you assume that the smaller donations divided in the same proportion as the larger donations, the campaign received roughly $20,000 of small donations before April 24 and $40,000 afterwards. In the month through the date of the appeal the campaign started with $6,000, by assumption received $36,000, and spent $60,000, leaving it short $18,000 relative to the disbursements it had made. Did the campaign actually write checks without having the money to cover them? This is difficult to believe. Or did the small donations come in more smoothly through the month, so that the spike in giving involved only large donations? In the latter case, Browne's Campaign could well have had the cash on hand to cover disbursements reported through April 24. Based on its FEC filings, made under penalty of perjury, the Browne campaign appears to have had nothing like $83,343 of debt.
How did the campaign explain its financial crisis? The previous Fall the Campaign had claimed to have a $750,000 reserve fund to pay all management expenses through to election day. Where was it? The campaign was being run by highly experienced Libertarian Party operatives. Indeed, many long-time activists said that Browne should be supported simply because he had the best possible team of Libertarian campaign managers. How could Browne 2000 have run out of money?
Instead of providing an answer, the campaign attacked its scapegoat. In the April 24th LibertyWire, Perry Willis wrote
"Our fundraising has been declining since Jacob Hornberger began his latest series of attacks against Harry Browne and the LP leadership...Unfortunately, our good name within the LP has been damaged to the point where the good will of a significant segment of the rank and file now seems lacking... Specifically, our motivations for wanting to challenge the FEC laws has been called into doubt...instead of simply offering arguments against the strategy, Mr. Hornberger and his allies have seized on the possibility that we have seized on challenging the FEC laws only to hide financial improprieties. And many people either have believed Mr. Hornberger's assertions or have had sufficient doubts about us to stop contributing to our campaign."
Willis's message included an attack on Browne's leading opponent, Don Gorman: "A Presidential campaign based on meeting voters in person and speaking engagements is doomed to achieve no more than a few hundred thousand votes." Willis said nothing about the synergy of campaigning with other candidates. Willis's prediction was right. A campaign based primarily on speaking engagements with no involvement with other candidates was precisely the campaign that Browne ran. And in November Browne was to receive precisely the voter response that Willis predicted for such a campaign, namely a few hundred thousand votes.
We now all have the FEC reports, so readers no longer need to entertain doubts. You can decide for yourself, based on the actual record, whether the Browne campaign failed to file with the FEC to hide its prevarications about its finances.
Readers may also ask themselves: Where was the Party's establishment while all this was happening? Browne had made a wide variety of claims about his finances, and how his years of campaigning had given his team an enormous financial and volunteer base. Now those promises were crumbling. The $750,000 cash reserve had mysteriously disappeared. A party establishment that believed that Libertarians oppose fraud should at this point have insisted that the Browne campaign account for the discrepancies or remove itself from the scene. The most prominent response of the establishment was instead the “Shut the F___ Up!” campaign, which demanded that Browne’s critics stop raising their issues. The establishment seemingly hoped that the irregularities would be forgotten by the membership. This circumstance bodes ill for the Libertarian Party. A Party of Principle that opposes theft and fraud will survive poorly having a Party establishment that by its deeds and later silence has removed all doubt that it views fraud as an acceptable path to the Presidential nomination.
FEC reports do confirm some aspects of the Browne Campaign's April 24 fundraising appeal. For example, the Browne campaign reported having spent a shade under $200,000 in advertising, including production costs for the video. FEC reports show that the campaign made disbursements to Polaris Productions for producing the ads, for roughly $149,000. It had also paid about $31,000 to make copies of the video, the copies it distributed and sold to delegates and others. Last and least, it had disbursed approximately $20,000 to The Firm Multimedia, which placed Browne ads on television. This total is indeed $200,000.
Almost all the money went to making the ads and copying the video for Browne supporters. Only ten cents on the advertising dollar went to putting the video in front of the general public. The Browne campaign's video campaign ran on lines opposite to those in general use, in which not ten but ninety cents on the advertising dollar might go to putting the video in front of the general public.
On April 24, 2000, readers did not have the luxury of reading Browne's FEC reports. They had the Browne campaign's assertions as to its spending and results, and the promise "we will file the FEC reports next week." The latter promise was reassuring to many readers. After all, if FEC reports were going to reveal serious fiscal improprieties, the campaign was hardly likely to file with the FEC before the FEC compelled it to file. By promising to file file as soon as practicable, the Browne Campaign suggested any reasonable person that nothing had been questionable in its conduct.
The Browne campaign did not file "next week". Not until May 23 were the financial reports filed. Despite the controversy, April was one of the Browne Campaign's better months for fundraising, with $107,358 coming through the door. For the month, the campaign spent only $68,164, leaving it with $45,674 cash on hand and a total debt of $1,000, all to Harry Browne. Over the month, associates of the campaign received
Jim Babka $ 2,700
Erich Covey $ 372
Robert DeVoil $ 5,532
Debra Greeson $ 2,618
Thomas Peary (travel) $ 245
Stuart Reges $ 1,000
Steve Willis $ 2,965
Perry Willis $ 2,500
Stephanie Yanik $ 1,500
TOTAL $19,187
Robert Brunner and Jennifer Willis apparently received no pay in April. Between them, Robert DeVoil and Stuart Reges received $6532, roughly what they had received in February. Most other associates received less than they had in prior months, in some cases much less.
In some ways this month was one of the most effective at focussing campaign spending on campaign objectives. In total, the Campaign's associates received only 28% of the campaign's spending; associated firm Optopia received $1476, slightly more than 2% of spending. Other income went to outside vendors and to an expanding cash reserve.
In addition to these expenses, major disbursements included
William J Olson PC Trust $15,000
Mount Vernon Printing $ 8,912
Harry Browne (loan repayment) $ 3,500
Seabreeze Travel $ 3,452
B&B Duplicators $ 3,213
Newman Communications $ 2,333
Walter Carl List Brokers $ 2,120
Total $35,030
May 2000
Some Nice Words and Some Less Nice Words
In May, LiamWorks received $10,000 from the Browne campaign. LiamWorks was Harry Browne's publisher and supplier of printed material. For reasons never clear to this author, some Libertarians expressed surprise that Browne needed a publisher to produce his books and tapes, and even more surprise that the books and tapes cost money to print and distribute.
Tom Knapp of Missouri, who was not a supporter of the Browne nomination campaign, spoke very positively of Liam Works and its owner, Art Matsko. In an open letter circulated to Libertarians across America, Knapp wrote on March 21, 2001:
"I do want to mention what a sterling fellow Art Matsko has been to do business with. I did business with him a number of times in the last campaign season, mostly to acquire campaign materials for use in Missouri and in my local area. EVERY time we talked, he tried to find ways to get me more stuff for less money, generally by offering to cover the freight, or, if I needed something more quickly, to charge regular freight and cover the upgrade to rush status.
"I don't know if Art made a profit on the campaign materials. If he treated everyone else like he treated me, I doubt it—but he SHOULD have....As far as I can tell, Art and Liamworks have done a hell of a job of keeping Harry's books available, of providing services for which they contracted, and of making Harry and the LP look good..."
The author has been in touch with many other Libertarians across the United States. Some of them pointedly faulted the Browne campaign's decision to charge its supporters for bumper stickers and lawn signs, rather than paying for the stickers and signs with donations. Others complain about the prices the campaign set for its distributor. Not once have I heard a complaint from anyone who dealt with Liam Works that they did not receive what they ordered in a prompt and efficient way.
In May the Browne campaign was also beneficiary of a bit of journalistic legerdemain by the Party's official newsletter, LP News. Bumper Hornberger had emerged from the shadows. He was again running for the Presidential nomination against Browne. Hornberger was an active member of our Virginia Party. In Summer 2001, Virginia activist Jim Turney reported on a National email list the extensive hours that Hornberger invested in the thankless task of collecting signatures to put candidates on the ballot. He renewed at his party's state convention on May 6. However, for the previous month he had not yet paid membership dues.
LP News took the opportunity to refer to Hornberger as a 'former member'. This reference was false. The Party's By-laws provide that a "member" is anyone who has taken the membership pledge, whether their dues are current or not. A person whose dues are current is a "member whose dues are current". By falsely referring to Hornberger as someone who had left the Party, LP News disparaged Hornberger and damaged his campaign.
The editor of LP News was Bill Winter, who in the 1996 campaign had been on Browne's payroll. Based on the 8/1/95 memo from Perry Willis, Winter had actively participated in managing Browne's 1996 campaign. This treatment of Hornberger by the National Party leadership and staff continued in 2002, when Hornberger ran for U.S. Senate in Virginia, and by all reports National Chair James Lark promised to campaign vigorously against Hornberger’s efforts to obtain the Virginia Libertarian Party nomination. Hornberger chose to run instead as an independent.
In total, during May the associates of the campaign received more than $30,000, while firms connected with associates received almost $12,600, for a total of 37% of campaign spending of $116,182. For the month, the campaign received more than $94,000, spending down its cash on hand until on May 30 it had less than $24,000 on hand. The campaign began the month $1000 in debt to the candidate, borrowed and made partial repayments, and ended the month with $8500 in debt and obligations, all to the candidate.
Payments to associates, including both salary and other expenses, included
Jim Babka $4,000
Barbara Braun $1,185
Robert Brunner $3,750
Erich Covey $ 138
Robert DeVoil $3,874
Debra Greeson $2,284
Stuart Reges $3,500
Jennifer Willis $2,000
Steve Willis $2,500
Perry Willis $4,500
Stephanie Yanik $2,500
TOTAL $30,231
while firms connected with the traditional associates received almost $12,600, namely
New Media $4,000
Optopia $2,286
Web Commanders $6,310
TOTAL $12,596
Other major expenses for the month included
Accumail $14,470
Polaris Productions $10,000
Liam Works $10,000
Newman Communications $ 9,333
Mount Vernon Printing $ 7,105
The Firm Multimedia $ 3,874
Walter Karl $ 2,575
Bank and credit card charges $ 2,744
Seabreeze Travel $ 2,111
Phone $ 2,054
In addition, the candidate himself received $2353 for travel, phone, supplies, and related expenses and $2500 in repayment on loans to the campaign.
June 2000 "Is There a Volunteer in the House?"
Harry Browne wrote in the June 24 LibertyWire about his June spending, saying "A number of our over-worked and underpaid staff people are going without pay again to keep things moving. My campaign manager has been juggling his own bills and delaying his own pay, trying to make money available to purchase ads the week after the convention." Contrary to Browne's claims, every one of Browne's regular staffers is reported as being paid in June. Payments to the Campaign's staff were larger in June than in any prior month of 2000.
In late June, the Browne campaign trumpeted its supposed accomplishments, including producing four one-minute television commercials and a 30 minute infomercial, generating a new book "The Great Libertarian Offer", and recruiting and organizing 4600 volunteers.
The 30-minute infomercial proved to be highly resistant to distribution over the airwaves. The book had just appeared. Curiously, not a word was said about the FEC lawsuit, for which $25,000 had been set aside in the Trust account. What happened to the lawsuit? Wait a month.
And the volunteers?
There are strong reasons to suppose that the claimed volunteers were not what they sounded like, though it may well be that there was some definition of 'volunteer' under which that number of volunteers were out there:
1) The author has been in close contact with Richard Watras, Jr., chair of the Massachusetts Browne volunteer group. Mr. Watras allowed me to examine the complete roster of Browne volunteers in Massachusetts, all one dozen of them. Watras estimated that when it came time to do work, he had four real volunteers who were actually prepared to be active in Massachusetts.
Watras was also the appointed head of the Browne New Hampshire volunteer organization, because—he noted—Browne had not a single active volunteer in New Hampshire. New Hampshire has long been a hotbed of Libertarian activity. However, after Browne's 1996 campaign, Browne had few supporters among New Hampshire activists.
Based upon the Massachusetts-New Hampshire sample, from two states that have historically been strongholds of the Libertarian Party, the Browne Campaign appears to have had around one nominal volunteer per Congressional District, or perhaps 500 nationwide.
2) Libertarian Presidential candidate Donald Gorman went coast to coast to Libertarian state conventions. At each convention he looked for Browne volunteers: people handing out brochures, holding signs, shaking hands—doing things you expect volunteers to do. Four thousand volunteers represents nearly ten per Congressional District, at least some of whom would be expected to show up voluntarily at their state convention to see their candidate. Almost without exception, Gorman only saw members of the Browne paid staff working the convention crowds.
3) After the National convention, Browne was the nominee. There were then ballot access crises in Arizona, Illinois, Oklahoma, Pennsylvania, and Rhode Island. The Libertarian National Committee overcame these problems the American way, by burying them in money, spending a half-million dollars rather than the budgeted $100,000. In each case, there was a need for volunteers or paid petitioners to collect signatures to get ballot access for Browne. The campaign was repeatedly and publicly called upon by prominent Libertarian activists to ask its volunteers to help in the effort. After all, during the Illinois ballot access crisis two years earlier, Libertarians had travelled across the country to help their Libertarian brethren in Illinois. Wouldn't at least a few of the 4600 Browne volunteers have travelled as far as their supermarket to help their man?
The campaign said not a word. It never asked its volunteers to raise a finger to help Browne get on the ballot in Pennsylvania, Arizona, or anywhere else.
The silence from the campaign is very difficult to understand if the volunteers actually existed. 4600 volunteers is an average of 10 volunteers per Congressional District. Even if few of them collected many signatures, in Summer 2000 petitioners were charging $1-3 each for valid signatures. Every dollar spent on collecting signatures was a dollar less available for advertising and other activities.
The silence is very easy to understand if: There were in fact far fewer than 4600 volunteers. The campaign knew that in fact there were far fewer than 4600 volunteers. The campaign realized that a failed mobilization call would reveal to the Libertarian community that the 4600 volunteers were a campaign gimmick. Popping the bubble on the estimated count of volunteers might have popped the fundraising bubble.
Whatever the actual reasons, Browne's volunteers were never asked to help Browne with ballot access.
During the month leading up to the National Convention, the campaign's associates received almost $35,000, while a firm connected with associates received almost $6,300, Campaign associates and their firms thus received slightly less than 40% of the campaign's contributions for June. Those contributions amounted to $103,000, counting a $10,000 contribution by the candidate. The campaign borrowed a further $27,500 from the candidate, leaving it on June 30, 2000 with $43,000 in cash on hand, and $31,000 in debts to the candidate.
For June, associates of the campaign received:
Jim Babka $4,908
Barbara Braun $ 500
Robert Brunner $3,376
Erich Covey $ 306
Robert DeVoil $4,912
Ryan Goldfinger $ 688
Debra Greeson $2,992
Stuart Reges $3,000
Jennifer Willis $2,000
Steve Willis $3,542
Perry Willis $4,334
Stephanie Yanik $4,300
TOTAL $34,858
while a firm connected with the traditional associates received almost $6300, namely
Optopia $6,279
Major disbursements to vendors were
Polaris Publications $13,000
Liam Works $10,000
Seabreeze Travel $ 6,058
Talent Dynamics (media training) $ 5,500
William J Olson (legal) $ 5,000
Newman Communications $ 4,666
Libertarian National Committee (list rental) $ 4,458
The candidate was given $1035 for various expenses and $5000 toward repayment of his loans. Various telephone companies and an answering service received approximately $5700.
Fourth of July 2000
Finally, Browne reached the Fourth of July weekend and the Libertarian National Convention in Anaheim, California.
Browne had opponents. Three other men were running actively for the Libertarian Presidential nomination. Browne, Don Gorman, Barry Hess, and Dave Hollist staged a debate before the delegates. Neither Don Gorman nor Barry Hess elected to raise against Browne any of the serious financial or other issues that were known to exist relating to Browne's campaign practices. Bumper Hornberger had entered the race the prior year, withdrew, and then entered again just before the Party Convention. Having reached the Convention, Hornberger declined to debate Browne. Having missed being pounded by his opponents, Harry Browne won the Libertarian Party nomination for election as next President of the United States.