FEC Fines Ted Cruz for Misreporting the Source of $1 Million Loans from Two Banks

The Federal Election Commission (FEC) on Friday handed down a small fine against Sen. Ted Cruz (R-Texas) for misrepresenting the source of campaign loans in excess of $1 million during his 2012 campaign for U.S. Senate.

The FEC’s investigation concluded that Cruz obtained loans from Citibank and Goldman Sachs but erroneously reported that those loans were “personal funds,” in violation of federal law.

After the FEC conducted their audit, the Cruz campaign entered into a conciliation agreement with the agency and admitted that they failed to timely provide the legally-mandated information about the source of those loans. Additionally, the Cruz campaign conceded that they have still yet to amend their initial campaign finance reports.

Cruz drew scrutiny over the loans after at first insisting that he and his wife, Heidi Cruz, liquidated the entirety of their assets in order to finance his 2012 Senate run. An investigation by The New York Times later revealed that this was not the case. Rather, the Cruz family’s net worth actually increased during the period Cruz falsely claimed to have been turning his various investments into cash.

The Times also reviewed Cruz’s Senate Financial Disclosure Reports and discovered that the Lone Star State senator had incurred two highly-valued liabilities: the loans from Goldman Sachs and Citibank. Cruz campaign apparatchiks told both the Times–and later the FEC–that the source of funding for those two massive loans was “inadvertently omitted” from the required federal filings.

Following that report, non-profit money-in-politics government watchdog groups Campaign Legal Center (CLC) and Democracy 21 filed an official complaint with the FEC alleging that Cruz lied about the source of those funds.

Relying on 52 U.S.C. §30109(a)(1), the joint CLC-Democracy 21 complaint claimed Cruz’s Senate campaign and Cruz himself “caused an informational injury” which deprived the groups, “voters and members of the public of information that they were entitled by law to have.”

This failure to disclose, the groups claimed, was a direct violation of the Federal Election Campaign Act, specifically the reporting requirements contained at 52 U.S.C. §30101.

The FEC ultimately agreed with the complaining parties.

Cruz’s campaign has now agreed to pay $35,000 for the violation and, as noted above, cop to their continued wrongdoing.

CLC issued a press release celebrating the decision:

Candidates should take seriously their legal requirement to disclose where their campaign money comes from. [The FEC’s] announcement is an acknowledgement that Cruz’s campaign deprived voters of that critical information.

“In the homestretch of a high-profile election, voters were misled about Cruz’s personal and campaign finances,” said Tara Malloy, CLC’s senior director, appellate litigation and strategy at CLC. “This is particularly harmful given that financial issues were at issue in the campaign and could have factored into voters’ decision-making at the ballot box.”

The Cruz campaign said that the “loans were public at the time and fully disclosed on Senate ethics disclosures, but they weren’t reported correctly on the FEC forms.”

“This agreed settlement resolves that filing mistake once and for all,” a statement continued.

[image via Justin Sullivan/Getty Images]

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