Michigan Republican Party faces financial turmoil, bank records show

Lansing — The Michigan Republican Party had about $35,000 in its bank accounts in August, according to internal records that flash new warning signs about the dire state of the GOP's finances and raise questions about whether the organization is complying with campaign finance laws.

The documents, obtained by The Detroit News, cover from February when party Chairwoman Kristina Karamo took office through Aug. 10, about six weeks before the party's Mackinac Republican Leadership Conference and about five months into Karamo's term.

The party has regularly transferred money from an account that's usually focused on federal elections to other accounts to afford expenses, according to the records. And earlier this year, Karamo's 2022 secretary of state campaign loaned the party's federal account $15,000 after that account's balance turned negative. The transaction wasn't reported in disclosures from the campaign or the party's federal committee.

A listing of Michigan Republican Party account balances from West Michigan Community Bank showed $35,051 across seven accounts, with expenses for many of the scheduled speakers at the Sept. 22-24 conference on Mackinac Island not yet paid, including author Dinesh D'Souza and unsuccessful former Arizona candidate for governor Kari Lake.

At this point, 13 months before a presidential election, the Michigan Republican Party should have about $10 million in its accounts, said Tom Leonard, a former Michigan House speaker and former finance chairman for the state GOP.

More:Michigan GOP bank records reveal secret contribution from Karamo campaign

The party had less than 1% of the $10 million target.

"These numbers demonstrate that the party isn't just broke, but broken," Leonard said. "Given (Democratic President) Joe Biden's unpopularity, Republicans can still have a successful cycle, but it's clear they won't be able to rely on the Michigan Republican Party."

Karamo and a Michigan Republican Party spokesman didn't respond to requests for comment for this story.

But the severe financial problems and Karamo's handling of them helped prompt Warren Carpenter, a businessman and former chairman of the 9th Congressional District's Republican committee, to issue a statement, emphasizing that he had no "formal involvement" in the Mackinac conference.

More:Michigan GOP leaders tell their critics to 'pound sand' at Mackinac Island conference

With only two weeks before the conference, Karamo's team had asked Carpenter, a former Karamo supporter and donor from Oakland County, to help with the event, which traditionally costs about $700,000 to put on.

At that time, Carpenter said he was told the party had $30,000 in its accounts but still had to pay Lake $20,000 for speaking, pay D'Souza $28,000 and repay a loan of $110,000 for actor Jim Caviezel's speaking fee. Carpenter said he advised party leaders to cut D'Souza from the lineup to save money.

Carpenter said his principles eventually inspired him to not want to be involved in the conference.

"After consulting extensively with my attorney, I have been strongly advised to cease all communications and interactions with the team leading the Mackinac Leadership Conference," Carpenter wrote in a statement to GOP leaders. "This decision stems from the unsettling possibility of how the Mackinac Leadership Conference is being administered could result in both personal and legal repercussions."

Carpenter resigned as chairman of the 9th District committee on Tuesday.

'Significant challenges'

D'Souza ultimately didn't appear at the conference after the party sent out an email promoting him as a speaker as recently as Sept. 17, five days before the gathering on Mackinac Island began.

Also, D'Souza was still listed as one of the speakers on the party's website on Friday, five days after the conference ended and he didn't participate. Regular attendees had to pay $125 to $275 to register for the event, a price that didn't include the cost of a hotel on Mackinac Island.

During the conference, Dan Hartman, the Michigan Republican Party's general counsel, said he couldn't say why D'Souza didn't show up at the event.

As for the party's finances, the Michigan GOP had previously been primarily funded by 17 people or organizations, Hartman said. The party is in a state of transition, and the past leaders had thrown up "significant challenges" for the new grassroots-driven team, he added.

"Now, what's happened is it's rank-and-file and volunteers," Hartman said of the party's new leadership.

Michigan GOP delegates elected Karamo, a favorite among the grassroots wing of the party, chairwoman in February. While past chairs have been former elected officials and business leaders, Karamo is a former educator from Oak Park who lost a race for secretary of state by 14 percentage points to Democratic incumbent Jocelyn Benson in November. Plus, Karamo has been openly critical of some of the state's largest GOP donors.

Asked about the party's finances on Sept. 23, Hartman referred a Detroit News reporter to the state GOP's budget committee, but he said the party had the money it needed to get by. Dan Bonamie, chairman of the budget committee, refused to answer questions that same day when approached by the reporter inside the Grand Hotel.

During a closed-door state committee meeting on Sunday, the final day of the Mackinac conference, Karamo spoke about the health of the Michigan Republican Party's finances, according to a recording of the meeting obtained by The News.

"The party is not going bankrupt," Karamo told state committee members.

Murky finances

In July, Bonamie informed other Republicans at a meeting in Clare the party had about $93,000 in its bank accounts and was working on paying outstanding debt, according to a recording previously obtained by The News.

It's not clear in the bank records, which cover accounts launched by Karamo's team, how much debt remains. But the records do show about $90,000 in the accounts in early July when Bonamie gave his report.

In March, just after she became chairman in February, Karamo told a group the party had $460,000 in debt from the past leadership team.

Having debt is not unusual for the state GOP after a competitive election. But what is unusual, according to longtime Michigan Republicans, is the struggle the party in a key battleground state is having collecting money.

The bank documents show that multiple Michigan Republican Party accounts have fallen into the red at points this year, and Karamo's leadership team has frequently transferred money from one account to another to meet obligations.

In the past, the party has used its "administrative" account, which can raise money from corporate donors in secret, to fund the Mackinac conference, according to campaign finance disclosures. But this year, the party used its federal campaign account, which is usually focused on races for federal offices, such as Congress and president, and has to disclose its donors, according to campaign finance disclosures.

The biggest deposit in the "administrative" account this year was $10,007 on July 8, according to the bank records, which don't show where the money came from. The account's balance hasn't reached above $16,000, according to the records.

Ahead of the 2021 Mackinac conference, there were significant six-figure corporate sponsorships, former Michigan Republican Party Executive Director Jason Roe previously told The News.

Across April and May, the party's federal account paid the Grand Hotel $109,496 for the conference. The party disclosed the payments in federal campaign finance reports.

By Aug. 9, the party's federal account had a balance of $44,329, according to the bank records. But on Aug. 10, the party's federal account paid the Grand Hotel another $65,854, temporarily putting the account's balance at -$21,524, according to the records.

The party received $31,980 that same day from an unlisted source, pushing the account balance back up to about $11,000 on Aug. 10, according to bank records.

Moving money

The party's state bank account, which is usually focused on state-level races, had about $5,256 remaining as of Aug. 10, according to the bank records.

The account would be the one the party uses next year to get involved in campaigns for control of the state House. Currently, Democrats hold a narrow 56-54 seat majority in the chamber. Every seat will be on the ballot in 2024.

The Michigan GOP's state account had a negative balance as recently as June 14, according to the records. But the party quickly transferred $7,400 from the federal account to the state account, giving it a positive balance of $6,683.

Overall, the Michigan Republican Party transferred $31,400 from the federal account to the state account from April 12 through Aug. 10, the records show. Other than the transfers, the largest deposit in the account over the period was $250, the records show, indicating the party's fundraising is primarily happening through the federal account and then money is being moved elsewhere.

Karamo's "chair" account has received $11,400 in transfers from the federal account, according to the records.

The transfers from the federal account to other state party accounts don't appear to be detailed in the Michigan Republican Party's federal campaign finance disclosures.

As of June 30, the Michigan Republican Party reported its federal fundraising committee had $146,931 cash on hand. The bank records showed the federal bank account had about $66,278 at that point.

Using money in a federal party account for expenditures that wouldn't require reporting under federal law because they weren't related to federal politics would be an accounting "nightmare," said Mark Brewer, an elections lawyer and former chairman of the Michigan Democratic Party.

"You just risk breaking the law every time you do something like that," Brewer said of having to track financial totals while moving money in and out of the account.

In July, the Federal Election Commission asked the Michigan Republican Party why its financial tallies for the federal committee appeared to be incorrect. On Sept. 11, the party said it was working to address the question.

The Michigan Republican Party told the commission it "has gone through a series of administration transitions this year."

cmauger@detroitnews.com