As Ted Cruz tells it, the story of how he financed his upstart campaign for the United States Senate four years ago is an endearing example of loyalty and shared sacrifice between a married couple.
Sweetheart, Id like us to liquidate our entire net worth, liquid net worth, and put it into the campaign, he says he told his wife, Heidi, who readily agreed.
But the couples decision to pump more than $1 million into Mr. Cruzs successful Tea Party-darling Senate bid in Texas was made easier by a large loan from Goldman Sachs, where Mrs. Cruz works. That loan was not disclosed in campaign finance reports.
Those reports show that in the critical weeks before the May 2012 Republican primary, Mr. Cruz currently a leading contender for his partys presidential nomination put personal funds totaling $960,000 into his Senate campaign. Two months later, shortly before a scheduled runoff election, he added more, bringing the total to $1.2 million which is all we had saved, as Mr. Cruz described it in an interview with The New York Times several years ago.
A review of personal financial disclosures that Mr. Cruz filed later with the Senate does not find a liquidation of assets that would have accounted for all the money he spent on his campaign. What it does show, however, is that in the first half of 2012, Ted and Heidi Cruz obtained the low-interest loan from Goldman Sachs, as well as another one from Citibank. The loans totaled as much as $750,000 and eventually increased to a maximum of $1 million before being paid down later that year. There is no explanation of their purpose.
Neither loan appears in reports the Ted Cruz for Senate Committee filed with the Federal Election Commission, in which candidates are required to disclose the source of money they borrow to finance their campaigns. Other campaigns have been investigated and fined for failing to make such disclosures, which are intended to inform voters and prevent candidates from receiving special treatment from lenders. There is no evidence that the Cruzes got a break on their loans.
A spokeswoman for Mr. Cruzs presidential campaign, Catherine Frazier, acknowledged that the loan from Goldman Sachs, drawn against the value of the Cruzes brokerage account, was a source of money for the Senate race. Ms. Frazier added that Mr. Cruz also sold stocks and liquidated savings, but she did not address whether the Citibank loan was used.
The failure to report the Goldman Sachs loan, for as much as $500,000, was inadvertent, she said, adding that the campaign would file corrected reports as necessary. Ms. Frazier said there had been no attempt to hide anything.
These transactions have been reported in one way or another on his many public financial disclosures and the Senate campaigns F.E.C. filings, she said.
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.
Theyre two different reporting regimes, he said. The law says if you get a loan for the purpose of funding a campaign, you have to show the original source of the loan, the terms of the loan and you even have to provide a copy of the loan document to the Federal Election Commission.
There would have been nothing improper about Mr. Cruz obtaining bank loans for his campaign, as long as they were disclosed. But such a disclosure might have conveyed the wrong impression for his candidacy.
