|Credit: AP via Politico|
BRIEF LEGAL ANALYSIS:
1) Was initial loan improperly disclosed to the FEC? The thesis of the NYT article is that the loan reported to the FEC should have disclosed that the funds came from Goldman Sachs. Cruz and his campaign has acknowledged that that should have been disclosed, and that it was "inadvertent". It was almost an understandable error that it was not disclosed, because the Cruzes may have believed that they were, in effect, turning some of their investments in the GS account into cash.
2) Was the loan an improperly-large contribution from Heidi Cruz? We now know the loan was at least $545,000. Ted Cruz is able to lend and/or contribute an unlimited amount of his own monies to the campaign. However, his spouse is not. (11 C.F.R. §110.1(i)) Assuming that the Cruz assets were jointly-held (their was no designation in Cruz's 2012 financial disclosure), the total assets needed to be greater than $1,090,000 for there to be even an argument; it was not - using the high end of each disclosed range, the assets were worth no more than $745,000.
Additionally, federal election law (11 C.F.R. §§100.83 and 100.33) would seem to indicate that Ms. Cruz is deemed to have contributed half of the loan. This violates the contribution limits.
3) Was the transfer from Cruz's Senate campaign committee to the Presidential campaign committee improper? The March 31, 2015 transfer from the Senate committee to the Presidential committee was in clear violation of federal election law, and the Cruz campaign sealed the violation by their filings. Cruz was actively seeking nominations for both the Senate and the Presidency beetween March 23, 2015 to August 19, 2015; In July, the campaign formally told the FEC that he was running for both because Texas law permits him to do so.
Regulations (11 C.F.R. 110.8) PROHIBIT the transfer of funds between the two campaigns: "No funds, goods, or services, including loans and loan guarantees, may be transferred between or used by the separate campaigns, except as provided in 11 CFR 110.3(c)(5)." 110.3(c )(5) does not provide Cruz an exclusion; rather, it also indicates that the transfer must not permit contributors to double max-out.
4) Was the use of Cruz's Senate campaign committee funds for expenditures that were obviously related solely to the Presidential campaign improper? Funds contributed to a campaign committee are to be used in the campaign for that office. (52 U.S.C. §30114(a)) An argument could be made that building support among Republicans nationally (especially in non-adjacent Iowa) could benefit the Cruz Senate re-election committee, but it would be hard to keep a straight face. It could also be seen as a way of avoiding the prohibited transfer (see, above) to the Presidential committee.
Tempe attorney Paul Weich reported this article.
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