Sham audits may have hid theft from GOP

NRCC treasurer accused of siphoning off thousands meant for House races

By Neil A. Lewis
The New York Times
updated 12:18 a.m. CT, Fri., March. 14, 2008

WASHINGTON - The former treasurer of a Republican Congressional fund-raising committee may have stolen hundreds of thousands of dollars by submitting elaborately forged audit reports for five years using the letterhead of a legitimate auditing firm, a lawyer for the committee said Thursday.

Robert K. Kelner, a lawyer with Covington & Burling, who was brought in by the National Republican Congressional Committee to investigate accounting irregularities, said a new audit showed that the committee had $740,000 less on hand than it believed. Mr. Kelner said it was unclear whether that amount represented money siphoned off by the former treasurer, Christopher J. Ward.

Mr. Ward, who is under investigation by the Federal Bureau of Investigation, had the authority to make transfers of committee money on his own, Mr. Kelner said.

He said an investigation with the help of PricewaterhouseCoopers had "found a pattern in which Mr. Ward would transfer funds by wire out of the N.R.C.C. to outside committees." From those outside committees, Mr. Kelner said, money was then transferred to "personal and business accounts of Mr. Ward."

Mr. Kelner said that all of this was discovered on Jan. 28 after the current chairman of the committee's auditing panel, Representative Michael K. Conaway of Texas, a certified public accountant, made repeated requests to speak to the committee's outside auditors.

Mr. Conaway has said that after he was repeatedly put off by Mr. Ward, a meeting supposedly with the auditors was scheduled for that day.

But 30 minutes before it was to take place, Mr. Ward sent an e-mail message to colleagues saying that there had, in fact, been no outside audit. Party officials notified the F.B.I. and the Federal Election Commission.

Mr. Kelner said subsequent investigation showed that the five previous audits submitted to the committee by Mr. Ward for the years 2002 through 2006 were bogus. "The last genuine audit was in 2001," he said.

The audit reports, Mr. Kelner said, "looked very genuine" and carried the logotype of a recognized auditing firm that he declined to name. He said they might have appeared real to most people who were not sophisticated readers of such reports.

Ronald Machen, Mr. Ward's lawyer, declined to comment.

The committee is the chief fund-raising arm for Republicans running for the House.

Representative Tom Cole of Oklahoma, its chairman, briefed the Republican Congressional leadership on Thursday. In a statement, Mr. Cole said he had told them that "the information we have today indicates we have been deceived and betrayed for a number of years by a highly respected and trusted individual."

Mr. Ward was named treasurer of the national Republican committee in 2003 after serving for several years as an assistant treasurer. He had also been a partner in a political consulting firm, Political Compliance Services, that worked in 2004 on behalf of Swift Boat Veterans for Truth, the group behind advertisements attacking the military record of Senator John Kerry of Massachusetts, the Democratic presidential nominee.

Mr. Kelner lamented the fact that the finances of the Republican committee had been set up to allow Mr. Ward to authorize wire transfers of money unilaterally.

"In hindsight, it would have been better to have had tighter controls," he said.

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