‘Quico’ Canseco target of federal campaign audit


WASHINGTON — While running for Congress in early 2010, Texas Republican Francisco “Quico” Canseco secured two loans totaling $88,000 from a group of family businesses, with the money drawn from the bank account of a subsidiary whose address is indicated in Mexico. .

In April of that year, the same month he secured the company’s second loan, Canseco provided $86,000 as a personal loan to his own campaign, helping to catapult him to a seat in Congress. , where he served a single term before losing a re-election bid.

Now, as the San Antonio businessman seeks a long-awaited rematch with Democrat Pete Gallego, who defeated him in 2012, federal regulators are reviewing a range of loans, including those from Inmuebles Caza SA of CV, which appears to be a company registered in Mexico.

The company’s loans, if found to be for Canseco’s campaign, could violate federal restrictions on corporate campaign contributions as well as a longstanding ban on political contributions of foreign nationals, which extends to foreign companies, associations and partnerships.

Canseco’s campaign denied wrongdoing and said the Federal Election Commission investigation was part of a “routine audit” launched three years ago. The campaign also raged over the disclosure of a confidential affidavit submitted to the FEC that details the company’s loan transactions, which had never before been made public.

“The FEC was required to keep this document confidential, and the purpose of this confidentiality is to prevent such disclosures from being manipulated for political gain,” Canseco’s campaign said in a written statement.

Surfaces under oath

The affidavit, which was obtained by the Houston Chronicle, is now a factor in Canseco’s May 27 primary runoff with GOP challenger Will Hurd – a rematch of their 2010 showdown in one of the districts. most competitive Congressional Congress in Texas.

Spokespersons for the Hurd and Gallego campaigns said they were unaware of the Canseco affidavit until the Chronicle learned about it this week. An FEC spokeswoman also declined to comment on the affidavit, which contains a timestamp of October 25, 2012 – two weeks before Canseco’s election loss to Gallego.

Despite campaign complaints about the disclosure, Canseco aides say the 2012 affidavit, signed by Canseco’s brother and business partner, Jorge Canseco, doesn’t mean much. Veteran Texas political consultant Craig Murphy, who works for Canseco, said in an email that “the document, on its own, looks pretty innocuous and straightforward.”

But federal campaign finance experts say that, contrary to the Canseco campaign’s suggestion, the FEC can only investigate alleged violations of campaign law — and only after the bipartisan panel of commissioners votes. to authorize an audit.

“There is no random auditing of the FEC,” said Paul Ryan, an attorney who works on FEC and campaign finance issues for the Campaign Legal Center in Washington.

The three-page affidavit documents a pair of corporate loans that were made to Canseco through two family-controlled entities: Heron, Ltd, a family limited partnership, and Canseco Investments, Ltd., in which the two Canseco brothers held interests.

Canseco Investments, in turn, owned 99% of Inmuebles Caza, according to the affidavit. It was from Caza’s bank account that the funds were made available to Canseco. The first installment of $30,000 was approved in January 2010 at 14% interest. The second, for $58,000, was approved “around April 2010”, at 10%.

Separate fundraising reports filed by Canseco’s Congressional campaign show that on April 13, 2010, around the time the second loan to Canseco was approved by Heron and Canseco Investments, Canseco provided an $86,000 loan. $ to the campaign from his personal funds.

Not a contribution?

The FEC affidavit was apparently written to refute any suggestion that the company’s loans to Canseco were for its campaign, which could violate laws prohibiting direct corporate contributions to congressional campaigns.

The affidavit states that the loans were secured by Quico Canseco’s interest in Canseco Investments and were “not intended to be an unfair gift, contribution or benefit provided to him or his committee of countryside”.

The affidavit also reveals that the loan funds were paid from a bank account belonging to Caza, which is not registered as a Texas company and lists an address in Monterrey.

Jorge Canseco, who is also a San Antonio attorney, did not return a call seeking comment. But his affidavit says stakeholders turned to Caza “because Canseco Investments did not keep the funds in its own bank account.”

Campaign finance experts say that if the Canseco family’s corporate loans are tied to Canseco’s campaign, it could violate restrictions on corporate donations as well as foreign political contributions.

“If the money was given to him for that purpose, so that he could get a loan, or if it was money that he was not normally entitled to, then it would be a foreign contribution,” he said. the former general counsel of the FEC. Larry Noble, President and CEO of Americans for Campaign Reform.

“A bit of squishiness”

The Canseco case is unusual, Noble said, because normally foreign influence allegations in US elections involve donations tied to US affiliates of foreign companies or individuals. In the case of Caza, it would be a foreign entity controlled by Americans.

“There’s a bit of squishiness here,” Noble said, “because the money came from a foreign company controlled by American citizens. But it still comes from a foreign company.”

Congressional candidates can also donate as much of their own money as they want to their own campaigns. According to Ryan, they can also borrow money from banks or other lending institutions, provided it is done on terms that would generally be available “to similarly situated members of the public”.

Although Jorge Canseco’s affidavit denied any connection between the company’s loans and his brother’s campaign, the FEC could rule otherwise based on the totality of the circumstances.

Noble said the FEC could consider the timing of the loans, the amounts, their terms, who authorized them and the source of the funds.

“If the FEC finds that the paper trail shows that’s the only reasonable interpretation of that — that the money was actually for the campaign — then they can still find a violation,” Noble said.

Says Ryan: “There are certainly enough interesting facts to understand why the FEC is auditing this.”


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