Republican Party Suffers Spate of Money Woes

When bloggers started reporting last month that the RNC's deputy finance director had expensed a $450 jewelry store purchase as a "meal," she was abruptly terminated.

The deputy, Debbie LeHardy, has never publicly addressed the matter and did not respond to email and phone messages. But a subsequent review of campaign finance reports by ABC News has revealed that LeHardy was not shy about putting in for expenses. Reports show she collected $211,172 in reimbursements in 2009 and 2010, including more than $33,000 for "office supplies" and $17,621 for what was identified only as "Tips." (Several of those tips were in excess of $700.)

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The RNC has attempted to overhaul its finance department, since LeHardy's departure, given that questions about bookkeeping there just compounded unflattering reports about spending under the leadership of Chairman Michael Steele – including the infamous $2,000 bill from Voyeur, a Los Angeles club where topless dancers can be seen mimicking sex and bondage, submitted by a GOP consultant.

"We wanted to make a change in our finance department," RNC spokesman Doug Heye explained, noting that LeHardy's boss was replaced as well. "We've had to address internally problems that we've had and we have taken immediate action to fix those problems."

Even as Republicans have shown the potential for electoral gains at the polls and with donors, it has become clear the RNC is hardly alone in grappling with questions about its handling of funds. Just in the past two weeks, in fact, a series of political party committees have been confronting audits, investigations, and inquiries about their handling of donations.

In Florida last week, the chairman of the state Republican party was arrested on allegations that he pocketed $121,162 from party accounts in 2009 – allegations he has denied through a lawyer.

This week in Kansas, a Topeka newspaper quoted the state party chairman saying that when she took over operations last year, she discovered "the books were not clean." An FEC audit last month hammered that point home, finding the party co-mingled state and federal funds, took illegal corporate money, understated receipts by $111,000, understated disbursements by $176,000 and overstated year-end cash by $93,000.

In Texas, state GOP officials have been squabbling in recent weeks over bookkeeping problems that have left the party carrying more than $500,000 in debts.

And those incidents come as an FBI investigation, already months old, has been probing allegations of embezzlement at the National Republican Congressional Committee that could have involved more than $1 million in donor funds, according to reports in Politico and The Washington Post. "The evidence we have today indicated we have been deceived and betrayed for a number of years by a highly respected and trusted individual," Rep. Tom Cole (R-Okla.), then the chairman of the NRCC, told the Washington Post in March.

Scott Thomas, a former Democratic appointee to the Federal Election Commission, told ABC News that the commission's auditors have encountered plenty of irregularities surrounding the handling of political donations over the years – and it is not a problem that is unique to one political party.

"Having seen the process from inside the FEC for many years, it's pretty apparent that a lot of political party operations do not build in strong financial controls," Thomas said. "Part of that is they get new people at the head of the party every couple years. They want to bring in their own people and reinvent the wheel. You end up with a lot less continuity in terms of built in internal controls. That probably feeds much of what's going on."

Heye said he believes the problems have largely been resolved, and have in no way hampered Republican fundraising efforts, or harmed the party's ability to gather enough money to compete. Under Steele, the RNC has actually raised more than the DNC during the 2010 cycle, according to figures compiled by the Center for Responsive Politics. (The RNC has less cash on hand because it has spent more than the DNC also during this period.)

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"We have remained at parity, out raising them in nine separate months since Chairman Steele has taken over, and we've done that without the benefit of the president the house or the senate," Heye said.

Whether that can continue without being hampered by the latest string of problems, though, is unclear. Thomas said one or two cycles of bad press about money management can be "pretty devastating to their ability to excite big donors."

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