Michigan GOP to oust Karamo amid alleged bankruptcy risk

Kristina Karamo watches for votes to be tallied at the Michigan Republican Convention in Lansing on Feb. 18. (Sarah Rice for The Washington Post via Getty Images)

By Michigan Advance

December 12, 2023

BY JON KING, MICHIGAN ADVANCE

A former Michigan Republican District chair, and one-time staunch supporter of Kristina Karamo, says there are enough votes to oust her as state GOP chair.

“We’ve got the votes. She’s gone,” Warren Carpenter told the Michigan Advance on Monday.

Carpenter, who resigned in September as chairman of the 9th Congressional District’s Republican committee, sponsored the research in a 140-page report titled, “The Failed Leadership of the Karamo Administration,” which was released Sunday night.

It is being used by a group of dissident Republicans within the party to try and oust Karamo as chair at a special meeting set for Dec. 27. On Monday, Oakland County Republican Party Chair Vance Patrick added his name to that list.

In the report, Carpenter alleges that Karamo’s leadership “has put the Party at an imminent risk of defaulting on its line of credit and potentially needing to declare bankruptcy,” while also putting “the Party and its partners in a position of facing significant civil and criminal consequences for failing to follow state and federal law.”

A request for comment was sent to Karamo, but has yet to be returned.

The report, which includes copies of bank records and screenshots purporting to be of the state party’s accounts, claims that since Karamo assumed control of the party in February, it “is now in a significant negative financial operating position” and has amassed nearly $620,000 in debt.

“People should get prison sentences for the stuff they’ve done because other people in our country are getting prison sentences for the exact same things,” Carpenter told the Advance. “If we’re the party of law and order, I’m not going to have people telling me, ‘We’re the party of law and order unless there’s a sacred cow.’ That’s not what I wanted to be involved in. I did this for truth and transparency, and when I say this, I mean getting back involved in the party to try to get us over the finish line for some wins in 2024.”

Of particular concern to Carpenter are alleged violations of federal contribution limits as seen in the party’s November profit-and-loss statement which showed that major donors gave $263,203 that month.

“The only other sources of income identified in the November 30 profit-and-loss statement are $20,000 for the state convention and $19,127.60 in small contributions,” stated the report. “Accordingly, the vast majority of November contributions into the federal account came from one or more major donors. Under applicable federal campaign finance laws, a person is limited to contributing a total of $10,000 to a state party’s federal committee account.”

Carpenter contends that most of the November contributions to the party’s federal account came from a single unidentified donor, thus federal contribution limits were violated.

He also says questionable spending, such as nearly $75,000 for undisclosed services paid to a business associated with Ottawa Impact leader Joe Moss was not reported on any of the party’s campaign-finance reports, which he called “a significant compliance issue.” Moss, who is also chair of the Ottawa County Board of Commissioners, nominated Karamo for chair at the February convention.

One real consequence of these violations, according to Carpenter, is the chance the party is taking of losing what is known as “safe harbor” status within campaign finance law. According to the Federal Elections Commission (FEC), political committees that have internal safeguards in place to prevent the misappropriation of funds will be given “safe harbor” and not be assessed civil penalties for filing incorrect reports.

However, Carpenter believes once the FEC investigates the alleged violations, which he says is imminent, it will become clear they won’t meet that standard.

“Then every mistake they made is going to be seen by the FEC as adversarial,” he said. “That’s a totally different shift, and once you lose Safe Harbor in your FEC account, you don’t get to keep it for your state account. You don’t get to keep it for the administrative account or any of those, because all those operate under the same standards of Safe Harbor. So if you lose it for one position, you lose it for the entire body.”

Carpenter also notes that the party’s bylaws clearly state that the budget committee must have a member from all 13 districts who are supposed to control the party’s spending, which is not being done and why the violations are being allowed to occur.

“They’re operating a completely separate financial organization outside of the party with these individuals who are enriching their friends,” he said.

Additionally, the party accepted a $110,000 loan from the Lynnette R Wilson Trust to pay the speaking fee for actor Jim Caviezel to speak at the Mackinac Leadership Conference in September.

“The Karamo administration has driven the Party into an unsustainable financial operating Position,” concludes the report.“The Party cannot continue to operate any longer at this rate. Ms. Karamo’s financial plan has been a complete failure. And she has no new plan to bring the Party back. If Ms. Karamo is allowed to continue following her failed plan, the Party will endure additional financial losses and the creation of more debt—and ultimately the effective end of the Party. What seemed impossible at the beginning of 2023 has now become a reality in only nine months.”

Karamo’s leadership of the party has been plagued by public missteps and other reports of financial shortfalls and infighting. There was even actual fighting reported in July at a state committee meeting in Clare.

Carpenter’s report details more than $500,000 that the Michigan GOP owes to Comerica Bank for a line of credit, noting that the party made no payments on the debt’s principal and only “sporadic” interest-only payments in May, June, August, and September totaling $16,466. Meanwhile, the principal balance on the line of credit over that same period grew by an additional $49,400.

Karamo, meanwhile, has proposed eliminating some of the debt by selling off the party’s unused headquarters building in Lansing, despite the fact that it is not actually owned by the party, but instead by a trust governed by former party leaders and major donors.

On Friday, the state party filed a lawsuit against the Michigan Republican Party Trust and Comerica Bank saying the building properly belongs to the party.

Carpenter’s report says the legal action means the party will likely face legal action by Comerica Bank to collect on the debt:

“This lawsuit will likely include a judgement (sic) for the sheriff to seize all the Party’s assets for sale at auction and also a garnishment of the Party’s bank accounts and amounts that third parties owe the Party. Under this scenario, the Party will have little choice but to declare bankruptcy.”

As to who he thinks will take the reins of the party if they are successful in removing Karamo, Carpenter wouldn’t speculate on anyone in particular, only saying it had to be someone better than what they have now.

“I will support anybody who supports the principles that I first signed up for, which are law and order, transparency and hard work,” he told the Advance. “If any of these individuals that come forward want to sign up to that and prove that, then so be it. And if they get in and they don’t do it, then I’ll do the same thing I did with the prior administration, expose what the malfeasance is, and I’ll push to get them out. We want competent leadership.”

READ MORE: Effort to remove Michigan GOP chair builds momentum as infighting and debt plague party

This coverage was republished from Michigan Advance pursuant to a Creative Commons license.

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