Watchdog group calls for investigation of US Rep. Lori Trahan’s campaign funds

globe staff file photo/Globe Staff

An election watchdog group has called on federal regulators to open an investigation into US Representative Lori Trahan’s 2018 campaign spending, saying she may have used illegal donations to make large loans to her campaign during a heated 10-way primary race.

The Campaign Legal Center said Trahan changed her campaign and personal finance reports at least seven times after the election to try to show that she had sufficient personal funds to make $371,000 in loans to her campaign.

The group asked the Federal Election Commission to determine if most of the money Trahan said she loaned her campaign came from someone else, likely exceeding the $2,700 limit on individual donations.

“There is reason to believe Trahan for Congress materially misreported this critical, last-minute infusion of funds,” wrote Adav Noti, counsel for the Washington D.C.-based center, in its 18-page complaint.

Trahan insists the loan money came out of her own personal funds, including $300,000 from a joint bank account with her husband and $71,000 borrowed from a home equity line. Much of the money in the account, she said, came from her consulting business, Concire Leadership Institute, which paid her $265,360 in 2018.

Trahan’s campaign spokeswoman Gretchen Grosky said the Center’s complaint is largely based on financial reports filed in May 2018, months before she made most of the loans to her campaign, and didn’t reflect income she received from her business after May.

“Congresswoman Trahan complied with regulations set forth by the FEC and the Committee on Ethics regarding her campaign finances and personal financial disclosures, and this complaint is without merit.” she wrote.

A Globe story in early March raised questions about the source of a late infusion of cash to Trahan’s campaign, especially a $200,000 loan made in late August that allowed her to launch a last minute advertizing blitz. Trahan went from fourth place in the last pre-primary poll to narrowly winning by 145 votes.

In campaign finance reports, Trahan didn’t disclose the existence of the joint checking account she claims to have used to make the loans until after the November general election.

That led some, including Noti, to speculate that her husband David, a successful home builder, could have provided some of the funds, which would be illegal. Even spouses are limited to donations of $2,700.

Grosky has countered that the Globe is “doubting her success as a businesswoman.” She previously released a statement from an accountant showing Trahan has made more than $1.1 million from Concire since 2015.

But, while Trahan’s income may have been large, Noti points out that she didn’t report a sufficient bank balance to make $300,000 in loans from the account she said she used. He noted that she disclosed her husband’s numerous financial assets on her congressional disclosure reports, but Trahan was not permitted to use them.

“The simpler explanation is that the funds came from one of the accounts that she did disclose — as her husband’s,” said Noti, a former FEC senior attorney.

The declared income from Trahan’s consulting business also raises additional questions about how Trahan, as the company’s sole employee, could have earned so much while waging an upset campaign in a Democratic primary. Her 2018 income was only slightly less than the average of $302,356 she earned in three previous years when she was not running for office.

“When you’re running for Congress, it’s a full time job,” said Maurice Cunningham, a political science professor at UMass Boston, who was not involved in the Third Congressional District campaign. “To earn $265,000 while you’re doing that — it raises questions. Who are you earning it from and what are you doing for it?”

Trahan has declined repeated requests for an interview, but spokeswoman Grosky said that Trahan continued to work throughout the campaign.

She “remained an advisor for a handful of her longstanding clients and continued to book speaking engagements” because they “required comparatively less invasive work” than other projects that required travel, Grosky said.

Trahan has not released the names of any of her 2018 clients, saying their names are protected by confidentiality agreements. In disclosures to Congress throughout 2018, Trahan did not even acknowledge that her company had paying clients, as required, though her spokeswoman now says that was an oversight. Federal law requires candidates to reveal clients who paid them at least $5,000 unless the work is confidential.

Even then, they must disclose that clients exist. Trahan, who made transparency a centerpiece of her campaign, this month filed another amendment acknowledging she had confidential clients. She did not, however, disclose that she was paid by three clients whose identities she already disclosed to the Globe — eBay, Uber, and Ochsner Health System. Grosky said Trahan did not work for them in 2018.

Grosky also said that some of the money Trahan received in 2018 was for projects already completed.

“Concire is a strategy and leadership consulting firm that works with large, global companies on creating competitive advantage,” Grosky explained., declining to be more specific because these “engagements always come with confidentiality clauses.”

However, Trahan didn’t even list the company as an asset when she made her first personal financial disclosure to Congress last March. Three months later, she filed an amendment listing it as an asset, wholly owned by her, worth between $1,001 and $15,000. After the election, she increased the value to between $15,001 to $50,000.

If clients owed Trahan’s company money, experts said, the company should have been valued at at least the amount she was owed. Or, they said, it should have been based on the revenues it generated — her accountant said the company took in nearly $8 million in revenue between 2015 and 2018.

Trahan has said she closed down Concire after the election and the website is no longer active.

Though Trahan is allowed to keep clients’ names confidential, advocates at Common Cause, the nonprofit watchdog. said candidates should be willing to say who is providing their financial support.

“Voters deserve transparency when deciding who to vote for,” said Aaron Scherb, Common Cause’s legislative director. “By knowing who is funding candidates’ campaigns, voters can determine potential conflicts of interest.”

Noti said Trahan’s explanation of the source of her campaign loans was unpersuasive. He said that, for Trahan’s explanation of the loans to be true, she would have had to receive most of her 2018 income, more than $190,000, in the three months between May and the date of the last loan in August when the congressional campaign was in high gear.

“It’s incredibly convenient. She took in income during this magical short window that happened to fall between reporting deadlines? It’s ludicrous,” said Noti.

Under FEC rules, Trahan will get an opportunity to argue that the complaint should be dismissed. Then the FEC lawyers decide whether to recommend that the commission open an investigation.

If the FEC finds violations, it can impose civil fines of up to the amount of the transactions at issue — in this case, possibly $371,000.