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GOP-MISSING-MONEY-ART 03-05

FBI INVESTIGATES MISSING REPUBLICAN MONEY

By PHILIP SHENON

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EDS: This new story is a Page 1 refer.

c.2008 New York Times News Service

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WASHINGTON — Hundreds of thousands of dollars are missing and presumed stolen from the chief fundraising arm of House Republicans, according to party officials who described the findings of emergency internal audits.

The financial records of the group, the National Republican Congressional Committee, may have been falsified for several years, Republican officials said. The campaign committees of several Republican lawmakers may also have been victims of a scam that is now under criminal investigation by the FBI.

The audits were ordered after the abrupt departure several weeks ago of Christopher J. Ward, who had been treasurer of the committee. Lawmakers said that Ward, who served a similar role for dozens of individual members of Congress and their political committees, is the focus of the FBI’s criminal investigation.

The committee has acknowledged publicly that it was aware of "irregularities in our financial audit process" and that it had called in the FBI in February because "these irregularities may include fraud."

But until now the committee has not acknowledged that any money was missing from its bank accounts or that the financial irregularities might extend beyond the national committee to the campaign funds of individual Republican lawmakers who also worked with Ward, a longtime party operative.

The Republican officials said they could not discuss the details of their findings on the record because of the continuing criminal investigation.

A lawyer for Ward, Ronald C. Machen of the Wilmer Hale law firm in Washington, had no comment. A spokeswoman for the FBI’s Washington field office acknowledged that the bureau had opened an investigation at the request of the Republican committee.

The FBI investigation comes at an especially awkward time for House Republicans, who are struggling to raise money for congressional races in November.

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Their job has been made even more difficult by the large number of Republican lawmakers — more than two dozen from the House — who have announced their retirements, and by a series of unrelated criminal and ethics investigations of other congressional Republicans.

Ward had been treasurer of the national Republican committee since 2003. He had also been a partner in a private campaign consulting firm, Political Compliance Services, that gained notice in the 2004 presidential campaign because of its work on behalf of Swift Boat Veterans for Truth, a group that ran advertisements that criticized the military record of Sen. John Kerry of Massachusetts, the Democratic presidential nominee.

Committee officials said that bookkeeping irregularities were discovered in January after the chairman of the panel’s auditing committee, Rep. Mike Conaway of Texas, a certified public accountant, repeatedly asked to meet with representatives of the audit firm that was supposed to be reviewing the committee’s books.

"I just kept insisting that we meet with the auditors," Conaway said in an interview. "It finally came into my head, and as the circumstances unfolded, that no audit had been done."

He said that Ward had promised to set up a meeting with the auditors and scheduled the gathering in late January.

But 30 minutes before the scheduled meeting, committee officials said, Ward sent an e-mail message to colleagues announcing that, in fact, no audit had been done. The officials said the fundraising committee had since determined that its books had not been audited since 2003 and that Ward had submitted a series of falsified audits. The committee then called in the FBI. It is not clear, lawmakers said, if any fees were paid to audit firms in recent years by the committee, or where that money ended up.

"This was a longtime trusted employee and there were no obvious signs that he was living beyond his means," Conaway said.

Conaway said that the many Republican lawmakers who used Ward for their campaign funds or for bookkeeping for their political action committees were now hurriedly reviewing their own books for evidence of missing money or other improprieties.

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"If you were one of the members who had a relationship with him, you should go back through your records extensively to see if you were caught up," he said.

Committee officials said that at least two Republican lawmakers who were clients of Ward’s had reported to the committee in recent weeks that they had also found discrepancies in their campaign accounts.

(STORY CAN END HERE. OPTIONAL MATERIAL FOLLOWS.)

Rep. Rodney Alexander, R-La., said he ended his ties to Ward in February after learning of the concerns at the national committee. "Until then, we hadn’t seen anything to indicate there was a problem," Alexander said, adding that his bookkeepers had found no evidence of missing money or other wrongdoing.

Ward was named treasurer of the national Republican committee five years ago by Rep. Thomas M. Reynolds of New York, who stepped down as the committee’s chairman last year. Reynolds has found himself under attack on the campaign trail at home because of the reports of financial irregularities at the committee.

"Does Tom Reynolds ever accept responsibility for his poor leadership or does he just pass the buck?" asked John Gerken, campaign manager for Jon Powers, a Democrat who is challenging Reynolds.

Reynolds said in a statement that he and the national Republican committee were possible victims of "an elaborate scheme resulting in financial irregularities" by a "long-serving professional staff member," a reference to Ward. "At no time were there any red flags raised," the lawmaker said.

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