Hosemann challenges McDaniel campaign’s finance filings

The incumbent Lt. Governor’s re-election team seeks an Ethics Commission investigation into his Republican Primary opponent’s campaign finance filings. The State Senator says his campaign has done everything it was supposed to do.

On May 10th, candidates for office this year were required to file campaign finance reports for the period running from January 1st to April 30th. Considerable questions have been raised by incumbent Lt. Gov. Delbert Hosemann’s campaign, and an associated super-PAC, over the filings of one of his Republican challengers, State Senator Chris McDaniel.

Over the last several months, dating back to McDaniel’s end of year report for 2022, Hosemann has raised concerns over whether his main primary opponent’s campaign finance filings are improper, or even illegal.

McDaniel’s campaign has largely dismissed the accusations as being politically motivated.

Below is an account of the challenges that have been raised against McDaniel’s reporting, independent analysis of his campaign finance filings, and a review of Hosemann’s request for investigation by the Ethics Commission.

Completeness of Report

The most recent batch of concerns started with the incompleteness of McDaniel’s May 10th filing. Campaign finance reports customarily include a cover sheet that shows totals for the amount received, the amount spent, and cash-on-hand (the amount left to spend). They also customarily include a list of itemized receipts and expenditures.

The May 10th Report initially reflected on the Secretary of State’s website for McDaniel included only the cover sheet portion. Both members of the media and Hosemann quickly highlighted the deficiency and raise questions more generally about the accuracy of past reports.

“Standing for election integrity includes following campaign finance laws, which require basic reporting of contributions, expenditures, and cash on hand,” Hosemann tweeted on May 11th. “We are asking for enforcement of these laws. If Chris McDaniel can’t get this simple paperwork done, he won’t be able to manage a $7 billion budget.”

On May 12th, the Secretary of State’s office issued a statement saying it had experienced a sudden outage on its primary web server that caused only a portion of McDaniel’s complete report to show on the office’s website – essentially that McDaniel had filed the full report on time:

“We filed a report on time, we filed a complete report, but the Secretary of State’s website was down, it was crashed,” McDaniel told television station WDAM. “He [the Secretary of State] issued a statement explaining that to the whole state. The press reported on it. Delbert Hosemann is still slandering me.”

Hold the Line PAC

Hosemann’s complaints against McDaniel have not been limited to the initial completeness of the May 10th report, however. The Lt. Governor previously raised concerns about two PAC contributions totaling $465,000 from “Hold the Line PAC,” which McDaniel returned to the PAC after questions were raised about the legality of accepting the contribution.

Hold the Line PAC received the funds it ultimately transferred to McDaniel’s campaign from a non-profit corporation. Hosemann’s campaign contends that this movement of funds–from a non-profit to a PAC to McDaniel–was an impermissible attempt to circumvent Mississippi’s $1,000 corporate limit for contributions to a candidate.

In a letter to Secretary of State Michael Watson dated March 2, 2023, the Hosemann campaign argued both that the contribution from Hold the Line PAC violated the $1,000 corporate giving limit and that the PAC had also failed to timely register with the Secretary of State.

Watson announced that he had turned the matter over to Attorney General Lynn Fitch, citing a lack of investigative authority under Mississippi law. Fitch’s office has been largely mum on the issue, other than to say they are reviewing the claims.

McDaniel told WDAM that his campaign “sent that money back just to avoid a protracted fight.” He continued by saying, “We sent it back, and we showed on the document we sent it back. We did everything in the light of day.”

McDaniel’s campaign previously argued that recent U.S. Supreme Court rulings would have permitted the campaign’s acceptance of the funds from the Hold the Line PAC, but that they thought a legal battle would be an unnecessary distraction from the campaign.

“We chose to do right by Mississippi voters and end the nonsense through closing the PAC, refunding donations Delbert took ‘issue’ with, and refocusing the conversation around the issues that Mississippians care most about,” McDaniel spokesperson Nicole Tardif said.

The May 10th Report shows that the funds were returned to Hold the Line PAC on February 6th. The Hold the Line PAC termination was filed with the Secretary of State’s office on April 17th.

Double Reporting

One apparent error, both with respect to the 2022 End of Year Report and the May 10th Report, is that McDaniel is counting money received all the way up to the filing deadline for the report instead of only counting what was received during the period that is being reported.

The 2022 Report was due on January 31, 2023, but should only include contributions through December 31, 2022. The May 10th Report was due on that date, but should only include contributions made between January 1st and April 30th.

Because he included contributions up to the date of the filing deadline of January 31st, the 2022 Report listed $601,523.43 in itemized contributions that were actually made in January of 2023 and should not have been included. Those January funds belonged in the May 10th Report.

Most of the January itemized contributions improperly included in the 2022 Report were appropriately included in the May 10th Report ($597,023.43). $4,500 of the January contributions reported in the 2022 Report were excluded from the May 10th Report.

But the May 10th Report also included $9,800 in total contributions collected in early May that should not have been included. The result of the underreporting of previously identified January contributions, while improperly including early May contributions, is net overreporting of $5,300 for the January 1st through April 30th period.

The Fundraising Tally

The Hosemann campaign has also raised question on whether the Hold the Line PAC contribution should have been listed at all, since those funds were ultimately returned. Hosemann might understandably view the inclusion of the returned funds as a way for McDaniel to inflate the perception of his fundraising haul.

On the flip side, it’s not hard to imagine that McDaniel would have come under criticism for not showing the initial contribution from, and the eventual disbursement back to, the Hold the Line PAC in making a full accounting of campaign finances.

If one excludes the Hold the Line PAC contribution, removes the early May contributions, and includes the omitted January itemized contributions that had previously been reported in the 2022 Report, McDaniel raised $207,475.77 between January 1st and April 30th.

In the same period, Hosemann reported a total of $192,836.41 in contributions, giving McDaniel an approximate $15,000 edge in fundraising between the beginning of January and the close of April. Obviously, the period advantage for McDaniel is much larger, ballooning to almost half a million, if the reported Hold the Line PAC contribution that was later returned is counted.

Spokesperson Nicole Tardif said the McDaniel campaign is pleased with where they are financially at this point.

“The McDaniel campaign is running for Mississippians and is proudly powered by Mississippians,” Tardif explained. “Our most recent report highlights the incredible generosity from hundreds of hardworking Mississippians who have financially contributed and ensured we were able to outraise and outpace a sitting incumbent.” 

But the amount raised in any period can be misleading on the financial health of a campaign, even if there are no discrepancies. In this instance, Hosemann started with a sizable war chest prior to the January 1st through April 30th period.

As a result, Hosemann leads considerably when it comes to cash-on-hand. The current Lt. Governor reported over $3.3 million in cash-on-hand. That’s basically an order of magnitude above McDaniel’s reported cash-on-hand of nearly $336,000.

Hosemann told the Magnolia Tribune, “We will be in a very strong position to disseminate our message to voters—and we are grateful for the support we have received. Contrary to our opponent, we also are committed to transparency. Voters will continue be able to see plainly who contributed to us and how our funds were spent because that is the law.”

Challenge to McDaniel’s Campaign Committee

Hosemann’s campaign sent a second letter on May 11, 2023. This one was addressed to the Mississippi Ethics Commission. The letter asked for an investigation of whether McDaniel was in violation of Mississippi law which requires a campaign committee to file a statement of organization within 48 hours of receiving or spending $200 or more.

It points to three separate campaign committee names used by the McDaniel campaign in fundraising literature that it indicates have not been registered with the Secretary of State: (1) Committee to Elect Chris McDaniel; (2) Chris McDaniel for Lieutenant Governor; and (3) Friends of Chris McDaniel.

A pro-Hosemann super PAC, True Conservatives Mississippi PAC, issued a press release this week suggesting that McDaniel could be subject to up to $400,000 in fines for filing his May 10th report under “Committee to Elect Chris McDaniel.” The calculation was based on a maximum fine of $5,000 for taking a contribution of $200 or more without filing a statement of organization within 48-hours of receiving the donation, times 80 individual gifts over $200 included on the May 10th Report.

The May 10th Report was filed under “Committee to Elect Chris McDaniel.” The Secretary of State’s Office has said that no statement of organization had ever been filed for that committee.

The May 10th Report is currently the only filing under “Committee to Elect Chris McDaniel” on the Secretary of State’s website. Previous reports, including the 2022 end of year report, were filed simply under “Chris McDaniel.”

McDaniel’s campaign has claimed that it did file a statement of organization for the “Committee to Elect Chris McDaniel” back in 2006, that the statement of organization was needed to open a bank account that has received contributions to McDaniel’s state political campaigns over the last 17 years, and that the EIN for the committee was obtained under “Committee to Elect Chris McDaniel.”

McDaniel spokesperson Nicole Tardif told Magnolia Tribune that previous filings had been short-handed as “Chris McDaniel” by a past treasurer, and that those filings were hand delivered, leading the Secretary of State’s Office to upload them under the committee name of just “Chris McDaniel.”

Tardif said that “Chris McDaniel for Lieutenant Governor” was never a committee name and “was never used for the solicitation of funds.” She indicated that the email which included the phrase “Chris McDaniel for Lieutenant Governor” did so to generically describe the campaign and noted that the same email said, “Paid for by the Committee to Elect Chris McDaniel.”

On a raffle ticket for a Thompson sub-machine gun that included a picture of McDaniel and the phrase “Friends of Chris McDaniel,” Tardif said that the raffle was not commissioned by the campaign, but was done independently by an activist who supports McDaniel.

The allegations against McDaniel’s reports comes against a backdrop of a 2014 bid for the U.S. Senate that included several controversies.

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Editor’s Note: Delbert Hosemann’s attorney, Spencer Ritchie, is a board member of Magnolia Tribune Institute. By recorded bylaws, board members exercise no editorial control. The documents embedded were not provided by Ritchie or his firm, but were received as part of a request made to the Ethics Commission.