The American Democracy Legal Fund has filed a complaint with the Federal Election Commission against Representative Alan Grayson, Committee to Elect Alan Grayson, and Dustin Andersen, Treasurer, for violating the Federal Election Campaign Act of 1971.
Recent news reports, statements made by Mr. Grayson and his staff, and his campaign’s own reports filed with the Federal Election Commission (“FEC”) indicate that Mr. Grayson may have fraudulently been using one of his outside hedge fund entities to illegally pay a member of his campaign staff for political work off the books. One of the Grayson campaign’s senior staff members had his campaign salary cut by roughly $1,000 around the same time he has admitted being paid the exact same amount by one of Mr. Grayson’s hedge fund entities, even though Mr. Grayson has said that the hedge fund was engaged in no activity at the time. The FEC should immediately open a full investigation of this matter to get to the bottom of whether Mr. Grayson is creating essentially “no-show” jobs at investment entities he controls in order to supplement his campaign in violation of the Act.
The complaint is available below and in full with exhibits here. The American Democracy Legal Fund holds candidates for office accountable for possible ethics and/or legal violations.
FEDERAL ELECTION COMMISSION
American Democracy Legal Fund
455 Massachusetts Avenue, NW
Washington, DC 20001
Representative Alan Grayson,
Committee to Elect Alan Grayson, and
Dustin Andersen, Treasurer
PO Box 533616
Orlando, FL 32853-3616
Complainant files this complaint under 52 U.S.C. § 30109(a)(1) against Representative Alan Grayson, Committee to Elect Alan Grayson and Dustin Andersen, Treasurer, in his official capacity, for an apparent violation of the Federal Election Campaign Act of 1971, as amended (“the Act”) and Federal Election Commission regulations, as described below. Recent news reports, statements made by Mr. Grayson and his staff, and his campaign’s own reports filed with the Federal Election Commission (“FEC”) indicate that Mr. Grayson may have fraudulently been using one of his outside hedge fund entities to illegally pay a member of his campaign staff for political work off the books. One of the Grayson campaign’s senior staff members had his campaign salary cut by roughly $1,000 around the same time he has admitted being paid the exact same amount by one of Mr. Grayson’s hedge fund entities, even though Mr. Grayson has said that the hedge fund was engaged in no activity at the time. The FEC should immediately open a full investigation of this matter to get to the bottom of whether Mr. Grayson is creating essentially “no-show” jobs at investment entities he controls in order to supplement his campaign in violation of the Act.
Representative Grayson is a current Member of the U.S. House of Representatives, serving Florida’s Ninth Congressional District, as well as a candidate for U.S. Senate in Florida. Mr. Grayson was first elected to Congress in 2008 to represent Florida’s Eighth Congressional District but lost his bid for re-election in 2010. Representative Grayson was then re-elected in 2012 and again in 2014 to serve Florida’s Ninth Congressional District. In 2011, Mr. Grayson formed five companies as part of an overall network of outside hedge fund operations — the Grayson Fund, LP, the Grayson Master Fund (Cayman), LP, the Grayson Fund (Cayman) Ltd., the Grayson Fund General Partner, LLC and the Grayson Fund Management Company, LLC (hereinafter collectively referred to as the “the Hedge Fund”).
Recent news articles as well as statements made by Representative Grayson and his staff to the Office of Congressional Ethics (“OCE”) raise serious concerns that Representative Grayson and the Committee to Elect Alan Grayson (“the Committee”) improperly used the Hedge Fund to secretly underwrite campaign expenses in violation of the Act.
As reported by the New York Times, the finance director for Mr. Grayson’s 2014 Congressional campaign and 2016 Senate campaign, David Keith, was apparently paid $1,000 a month by the Hedge Fund from early 2014 to late 2015, a time period in which he was simultaneously working for the Committee to Elect Alan Grayson. According to Carla Coleman, who is Representative Grayson’s “Congressional Office Manager and Business Director,” the Grayson Fund Management Company, LLC (“the Management Company”) was ostensibly paying Mr. Keith an amount equivalent to eight hours of Hedge Fund work per week and only for one task: assisting the Hedge Fund with finding new investors. When asked by OCE to explain what responsibilities Mr. Keith held as part of his employment with the Hedge Fund, Representative Grayson listed only one duty, responding that “he’s involved in situations where there might be somebody who’s interested in investing in the fund.”
However, according to Mr. Grayson and his office, the Hedge Fund has been inactive since Mr. Grayson returned to Congress, namely January of 2013 until present day, and neither Mr. Grayson nor anyone acting on his behalf solicited investors for the Hedge Fund during that time. Representative Grayson told OCE that engagement with individuals interested in investing in the Hedge Fund, which is what the Hedge Fund supposedly paid Mr. Keith to do, “hasn’t happened recently.”
Furthermore, according to Representative Grayson, interested investors would first reach out to either Mr. Grayson or Ms. Coleman, and Mr. Keith would then get the investor’s information from Ms. Coleman in order to follow up. Yet, when OCE asked Ms. Coleman to explain Mr. Keith’s responsibilities with the Hedge Fund, she replied “I don’t know, you’d have to ask Alan. I’m not really sure what he does.” As Ms. Coleman was unaware of Mr. Keith doing any work for the Hedge Fund, and Mr. Keith could not do his job without working directly with her, it appears that he did not actually perform any work for the Hedge Fund.
The clear conclusion is that Mr. Keith did not actually perform eight hours of work a week for the Hedge Fund. By Representative Grayson’s own account, during the entire period the Hedge Fund paid Mr. Keith, the Hedge Fund remained inactive and did not solicit a single new investor. Rather, it appears that the Hedge Fund paid Mr. Keith the $1,000 per month for the work he performed as the finance director of the Committee.
Tellingly, in September of 2014, FEC reports filed by the Committee show that the salary paid by the Committee to Mr. Keith appears to have dropped by $1,000 per month — the exact amount Mr. Keith reportedly received per month from the Hedge Fund’s Management Company. This symmetry, along with the inactive state of the Hedge Fund, suggests that the Hedge Fund payment directly replaced the $1,000 in Committee funds to compensate Mr. Keith for his campaign work.
If, as these facts suggest, the Hedge Fund did pay Mr. Keith for over a year for Committee work, the Respondents committed a number of serious violations of campaign finance law.
Under the Act, if an entity compensates an individual for services that are rendered to a political committee, that compensation results in a contribution from the entity to the political committee. As such, the available information suggests that each $1,000 payment that was in fact provided to Mr. Keith for Committee work resulted in the Management Fund making, and the Committee accepting, a contribution from the Management Fund. If, as the facts suggest, the company made $1,000 disbursements on a monthly basis for over a year to compensate Mr. Keith for Committee work, then the Committee accepted excessive contributions from the Management Company in violation of the $2,700 per election limit imposed by the Act and then hid it by not publicly disclosing the salary payments on its regular reports as required by the Act. This lack of disclosure coupled with the complex nature of the Hedge Fund structure raises questions regarding the underlying source of the funds paid to Mr. Keith. The Commission should investigate to determine if these funds came from a prohibited source, such as a corporation or a foreign national.
Pursuant to the above, Representative Grayson and the Committee to Elect Alan Grayson appear to have engaged in an off the record scheme for over a year to use hedge fund money to illegally subsidize campaign staff expenses. I therefore respectfully request that the Commission immediately investigate this matter, enjoin Respondents from further violations of the Act and impose a fine of the maximum amount permitted by law.
SUBSCRIBED AND SWORN to before me this ____ day of June, 2016.
My Commission Expires: