Ted Cruz’s campaign spokesman Catherine Frazier confirmed on Thursday, that the Senator failed to disclose hundreds of thousands of dollars in loans from Citibank and Goldman Sachs, during his successful campaign in the Texas Republican primary. The senator did eventually list the loans on personal financial disclosures, but the Cruz campaign acknowledged the mistake after the New York Times report was published. Frazier said the loans from Goldman and Citi were borrowed against their own money — the couple sold stocks and liquidated their savings to finance the bid. She estimated the total loans were less than $500,000, and said he did not receive any special terms and has now paid off the loan. They are planning on working with the FEC to amend their prior filings, Frazier said.
The news, on the eve of the next Republican debate in South Carolina, could pose a political problem beyond the arcane campaign finance requirements. Cruz’s brand of Republicanism is cold toward concerns of major financial institutions, and he has pitched himself as a populist, evangelical everyman who gained political power through hard work and an appetite for risk. Ms. Frazier said there was not attempt to hide anything and the failure to report the loan was “inadvertent” and that he campaign would file corrected reports as necessary.
These transactions have been reported in one way or another on his many public financial disclosures and the Senate campaign’s F.E.C. filings.”
Kenneth A. Gross, a former election commission lawyer who specializes in campaign finance law, said that listing a bank loan in an annual Senate ethics report — which deals only with personal finances — would not satisfy the requirement that it be promptly disclosed to election officials during a campaign. Mrs. Cruz, who is on leave as a managing director at Goldman Sachs, later suggested that the reality was more complicated. She told Politico in 2014 that she thought they should apply “common investment sense” and not use their own money for the campaign “unless it made the difference” in winning. The article did not mention anything about loans from banks.
The ethics reports that candidates file with the Senate require them to list all assets they held at the close of the year or that generated income during the year. Assets are reported in broad categories of value, such as $1,001 to $15,000 and $100,001 to $250,000. The biggest change in the Cruzes’ finances in 2012 was the addition of the two bank loans, each valued at $250,000 to $500,000, during the first half of the year.
The federal guide to campaign finance reporting for congressional candidates makes it clear that if the original source of money for a candidate’s personal loan was a margin loan or a line of credit, it must be disclosed. Campaign staff on Wednesday downplayed the misconduct as nothing more than a clerical overlook.