Politics & Government

Complaint says top North Carolina Republican is taking donors’ money for personal gain

A longtime good-government advocate is accusing North Carolina’s Republican Senate leader, Phil Berger, of improperly using his campaign donors’ money to buy a house in Raleigh.

Bob Hall, who led the group Democracy NC before retiring, held a news conference outside Berger’s home near downtown Raleigh Wednesday morning, outlining his concerns over what he said were apparent violations of campaign law. He told reporters he planned to file a formal complaint with the North Carolina Board of Elections afterward.

However, Berger’s campaign staff told The News & Observer that the elections board has already signed off on the arrangement — not once, but twice, under political leaders from both parties.

Berger bought the townhouse in question for $250,000 in 2016, property records show. In a copy of his complaint shared with The News & Observer, Hall said that since then Berger has taken, via an LLC he controls, more than $55,000 from his campaign to pay for the house.

Berger “is using his campaign fund like a piggy bank,” Hall said at the news conference.

“Unless the State Board of Elections takes action, politicians will continue to profit handsomely by funneling campaign contributions to themselves, directly or indirectly, to pay for inflated expenses and subsidized assets,” Hall wrote in his complaint.

But Dylan Watts, the Senate Republicans’ political director at the NC GOP, said Wednesday morning that Hall’s claims are baseless because Berger already got the state elections board’s approval.

Watts said Berger got that approval once while the elections board was led by Kim Strach during Republican Gov. Pat McCrory’s term, and again under the leader appointed under Democratic Gov. Roy Cooper, Karen Brinson Bell.

“This is just another example of Bob Hall being a bottom-feeder and a scumbag,” Watts said.

Call for broader investigation

Although Berger spends much of his time in Raleigh due to his legislative leadership duties, his main residence is in Eden, a small town near the Virginia border in Rockingham County. For the last 20 years in the legislature, he has represented that rural area north of Greensboro.

The complaint also says Berger has charged his campaign more than $100,000 in recent years for rent and other expenses at his law firm in Eden, through a different LLC he controls.

Campaign finance records show Berger typically pays himself $3,000 a month in rent from his campaign — $1,500 each for his law office and his Raleigh townhouse.

“Especially given the clever way an intermediary company is being used to funnel campaign money to a politician, I am also asking the Board to conduct a thorough investigation of other transactions where Phil Berger’s campaign funds are directly or indirectly personally enriching him,” Hall wrote.

But it’s the Raleigh townhouse that’s the focus of the ethics complaint. Berger and his wife Patricia live there much of the year; he employs her as a paralegal at the legislature.

Hall said there’s no problem, according to state elections officials, with lawmakers using their campaign money to pay for rent. But Berger is paying a mortgage, Hall said, which complicates matters.

In Hall’s complaint, he writes that “accountants will tell you that paying for the purchase of a house is not an expenditure – it’s a substantial capital investment in an asset that could increase in value over time. Put another way, this appears to be a case of a legislator profiting from his campaign by using his contributors’ money to acquire an asset worth about $250,000.”

“One way or the other what he’s doing is he’s using his campaign money to buy an asset, to buy a house,” Hall told reporters.

Compared to the rest of Berger’s political expenses, his rent payments to himself are relatively small. In the first half of 2019, records show, Berger’s campaign raised nearly $420,000 and spent around $65,000. He went into the second half of the year with more than half a million dollars in his campaign account.

Use of campaign accounts

The North Carolina General Assembly is not technically a full-time legislature, and legislators are required to maintain their primary residence in the district they represent — many of which, like Berger’s, are not particularly close to Raleigh. Lawmakers are also paid small salaries, typically $14,000 per year, plus an additional stipend of $104 a day every day the legislature is in session for food and housing.

Despite that housing stipend which could pay for a modest hotel room, many also dip into their campaign accounts to pay for more permanent lodging in the capital city.

A News & Observer examination of campaign finance records in 2018 found numerous lawmakers from various parts of the state using their donors’ money to pay for expenses like rent and parking in downtown Raleigh, or homeowners’ association fees in suburban Raleigh neighborhoods.

But Hall said he examined years of campaign finance reports and could find only one other example of a lawmaker using campaign cash to buy property — Berger’s leadership counterpart in the N.C. House of Representatives, Republican Rep. Tim Moore.

Hall said Berger and Moore appear to be trendsetters in using campaign cash to invest in property.

“Going through records over the past decade, I also do not see any examples of campaign-financed capital investments benefiting the previous legislative leaders – namely House Speaker Thom Tillis, House Speaker Joe Hackney or Senate President Pro Tem Marc Basnight,” Hall wrote.

Moore is from Kings Mountain in Cleveland County, west of Charlotte.

Hall said that similar to Berger’s setup with his townhouse in Raleigh, Moore bought a condominium in Raleigh using a company he controls and then from 2013 to 2016 used his campaign donors’ money to pay his company more than $22,000.

The News & Observer previously reported that Moore had used his legislative stipend to pay his company rent for the condo while the legislature was in session, and that he used campaign cash to pay rent on it only when the legislature wasn’t in session.

For more state government news, listen to Domecast, the politics podcast from The News & Observer and the NC Insider. You can find it on Megaphone, Apple Podcasts, iHeartRadio, Stitcher or wherever you get your podcasts.

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Will Doran reports on North Carolina politics, with a focus on state employees and agencies. In 2016 he started The News & Observer’s fact-checking partnership, PolitiFact NC, and before that he reported on local governments around the Triangle. Contact him at wdoran@newsobserver.com or (919) 836-2858.