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The Republican Party of Minnesota currently owes as much as $2 million to creditors, according to an internal financial review released on Friday. That's nearly four times the amount most party activists had been lead to believe less than a month ago.

GOP internal financial review uncovers $2 million in potential debt

Mike Vekich and Kelly Fenton

The Republican Party of Minnesota currently owes as much as $2 million to creditors, according to an internal financial review released on Friday.  That’s nearly four times the amount most party activists had been lead to believe less than a month ago.

“The debt number is honestly higher than any of us wants it to be,” acknowledged Republican National Committeeman Jeff Johnson, who helped lead the financial review. “There’s some ugly stuff in here.”

The internal review process lasted two months and was headed by Johnson and businessman Mike Vekich. It determined that the party currently has $1.3 million in debt on the books. Most troubling, that includes $415,000 in financial obligations that had not been previously reported in campaign finance reports. The lack of disclosure raises the strong possibility that the party could face punishment from the Federal Election Commission in the near future.  The GOP still owes more than $100,000 on a previous FEC fine for campaign finance violations.

“Why they were not reported, I don’t have an answer to that,” Vekich said at a press conference. “The party will be consulting with the FEC on some of these unreported amounts.”

But $1.3 billion is almost certainly not the full extent of the party’s financial obligations. That figure doesn’t include $719,000 in legal bills associated with the 2010 gubernatorial recount that the party is also likely on the hook to cover. Attorney Tony Trimble told PIM earlier this month that former GOP chair Tony Sutton signed an agreement obligating the party to cover any bills incurred by the independent corporation, Count Them All Properly,  set up to raise money for the recount. Sutton subsequently acknowledged signing the agreement and failing to tell other party officials about its existence.

But when Vekich was asked whether GOP officials question the validity of such an agreement, he demurred. “That’s under legal review,” he said.

The final financial kick to the teeth for the state party is the revelation that the receiver in convicted Ponzi schemer Tom Petters’ bankruptcy proceeding is seeking $75,000 in returned contributions. That request has also been turned over to the party’s lawyers.

All told the debt potentially comes to nearly $2.1 million.

GOP activists will gather in St. Cloud on Saturday to elect a new party chair. GOP strategist Pat Shortridge is widely viewed as the frontrunner to replace Sutton, who resigned earlier this month. Delegates are also expected to spend time scrutinizing the results of the internal financial review and adopting a budget for 2012.

Johnson suggested that the new revelations about the extent of the party’s debt should be viewed as the start of financial revitalization for the beleaguered party. “There are some warts in here,” Johnson said. “But it’s all disclosed, we’re not running away from it, and we intend to meet it head on. This is absolutely in my opinion surmountable.”


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