WASHINGTON, D.C., USA — Sen. Mike Braun's campaign is facing accusations of having about $8.5 million in prohibited loans, according to a draft audit by the Federal Election Commission. The accusations include about $1.5 million in corporate contributions from the company Braun created, Meyer Distributing. Corporate contributions are illegal.
A spokesperson for the Senator sent this statement to 13News Thursday afternoon:
"The DRAFT audit report issued by the FEC's audit staff nearly two months ago was just that: a draft issued before the campaign committee provided the necessary documentation to clear up the loan issues raised in the report. However, if you have read the documents that the campaign committee has since provided to the FEC or listened to the recent hearing with the FEC Commissioners, it is clear that the final version of the FEC's audit report will conclude that all the loans fully complied with the law. Sometimes these FEC audits require time to work themselves out; that has been the case here, and we’re not the least bit concerned about how the process will end." - Joshua Kelley Chief of Staff and Senior Political Advisor
The amount was marked originally as "compensation" to Braun, then marked as redeemed stock, and finally as loans.
An attorney for the Braun campaign argued the $1.5 million in loans were "…the personal funds owed by Meyer Distributing to the Candidate, and the Candidate paid taxes on the amount as income to him." Tax documents were provided to try and support that statement.
However, the Draft Final Audit Report for the FEC found the $1.5 million was from a "prohibited source" and lacked "records such as a stock purchase agreement between the Candidate and Meyer Distributing or the financial documents that the CPA reviewed to determine the stock sale." The Draft Final Audit Report also claimed Mike Braun for Indiana's response had indicated the $1.5 million was compensation for Braun's services to the company, but the Braun's Certified Public Accountant indicated the funds were for stock sale.
The FEC also points to other improper loans, including five loans and 11 lines of credit from financial institutions, totaling $7,049,405.
The Braun campaign attorney argued commercial lending institutions provide unsecured lines of credit to "creditworthy" individuals who are unlikely to default on the loan.
Braun's attorney argued the loan agreement had the signature of a "high-net-worth, creditworthy individual who, in the bank's own judgment, was very unlikely to default on the loan." He claimed that all made it fall under an ordinary course of business for the lending institutions and so was legal.
However, the Draft Final Audit Report found that not to be the case, citing that there was no collateral offered for the lines of credit to the campaign, Mike Braun for Indiana did not provide the fully signed copy of a loan agreement, lending institution certificates or any other documentation from its financial institutions demonstrating that Mike Braun for Indiana's loans were not unduly favorable to the candidate.
In conclusion, the audit staff notes that, "absent documentation to demonstrate the loans and lines of credit totaling $7,049,405 were made on a basis that assured repayment, they were not made in the ordinary course of business. Additionally, absent documentation that verifies or supports the CPA's conclusion regarding the sale of stock, the Audit staff maintains the $1,500,000 appears to be from a prohibited source."
It is important to note that this is a draft audit and that the Braun campaign said it is still working to track down former treasurer, Travis Kabrick, to provide documentation and clarification.
EDITOR'S NOTE: The headline has been adjusted to clarify the campaign itself and not Sen. Braun is being questioned in an audit about loans received.