South Carolina Probing Graham Theft

Posted October 15, 2007 at 6:29pm

South Carolina law enforcement and federal election officials are investigating whether a former staffer for Sen. Lindsey Graham (R-S.C.) stole more than $200,000 from Graham’s campaign coffers during a more than four-year period ending in 2005.

The South Carolina Law Enforcement Division confirmed Monday that it is looking into allegations made by Graham’s campaign committee, but citing agency policy, it declined to name the individual involved.

Graham’s office, however, has been working with state law enforcement officials and the Federal Election Commission for roughly a year on a case involving Jennifer Adams, a former press aide in Graham’s Senate office who also worked as a part-time bookkeeper for his re-election committee.

Adams was fired by Graham’s office on June 19.

The FEC also declined to discuss the case, but Graham’s office suspects Adams began pilfering campaign accounts in November 2002, according to an Oct. 1 letter from Graham’s campaign treasurer, Kevin Hall, to the FEC.

Earlier this month, Graham’s lawyers restated more than four years of campaign finance records, which show alleged unauthorized payments by Adams to herself and various credit card companies.

On Monday, Graham’s campaign sent a mass mailing to his donors detailing the allegations. He did not name Adams in the letter.

“Our campaign recently conducted an intensive internal review of our financial records. During this review, we uncovered a number of unauthorized disbursements made by a former employee,” reads an Oct. 15 letter signed by Graham. “Our campaign contacted the Federal Election Commission upon discovering the suspected misappropriation of funds to make them aware of the situation and to seek appropriate guidance on how to proceed.”

He added: “The individual in question has been terminated from employment, and we have implemented strict internal controls governing all financial activities of the campaign to ensure nothing like this happens ever again.”

The campaign alleges Adams made more than 75 illegal payments for as little as $186 and as much as $11,252.

Graham’s campaign first discovered Adams’ suspicious transactions two years ago when campaign officials began reconciling campaign bank accounts. The campaign initially moved slowly in the case, sorting through thousands of entries to determine if the missing money was a result of clerical errors or overlooked transactions.

But after unearthing a pattern of suspicious withdrawals, Graham’s office became less convinced human error was to blame. And in the fall of 2006, the Senator’s office contacted the FEC and South Carolina Law Enforcement Division regarding their suspicions of Adams.

After handing the case over to investigators, Graham’s office also overhauled its internal accounting procedures, shoring up lax check-writing policies and other responsibilities that can cause massive — and expensive — headaches for campaigns.

Still, Graham’s campaign may draw FEC scrutiny.

After a series of high-profile embezzlement cases involving Sens. Elizabeth Dole (R-N.C.) and Trent Lott (R-Miss.) and Minority Leader John Boehner (R-Ohio), the FEC last fall introduced accounting guidelines intended to protect campaign committees from rogue employees walking off with donations.

The FEC also unanimously agreed that if campaigns follow their advice, committees may be granted immunity from the agency for filing incorrect disclosure forms, an inevitable byproduct of embezzlement that recently has stung Rep. Lloyd Doggett (D-Texas) and Lockheed Martin’s political action committee.

“[If] internal controls are in place at the time of misappropriation … the FEC will not seek to impose liability on the political committee for filing incorrect reports due to the misappropriation of committee funds,” agency officials said last fall, when the policy was first introduced. “The commission will also consider the presence at some, but not all, of these practices or comparable safeguards as a mitigating factor in considering any liability from a misappropriation.”

The agency recommended in its new policy that committees not open accounts in the name of an individual, campaign checks for more than $1,000 should require two signers and that incoming checks be signed “For Deposit Only.”

“We have provided guidance to committees on how to improve their internal controls and we have said that if you meet the requirements in this guidance, then you will not be subject to these penalties,” FEC spokesman Bob Biersack told Roll Call on Monday.

Recent embezzlement cases at the FEC suggest that the agency may show little sympathy for Graham’s misfortune. Last spring the agency bestowed a heavy hand with Doggett’s campaign, fining it $6,500 for filing inaccurate disclosure statements during a five-year period. The campaign was forced to amend years’ worth of campaign finance documents when it determined its bookkeeper bilked the campaign till of roughly $160,000.

In 2006, the FEC also fined Lockheed Martin’s political action committee $27,000 for keeping sloppy books, essentially allowing an employee to siphon off more than $150,000.

The FEC would not confirm if Graham’s case is part of the agency’s hefty embezzlement caseload. Republican-nominated FEC Vice Chairman David Mason recently said the agency is working through 10 embezzlement cases.