BOISE, Idaho — U.S. Sen. Mike Crapo’s former campaign manager blames his friend for investing $250,000 from donors in a Las Vegas company amid the 2008 global financial crisis, part of a scheme intended to pay off within two months.
That’s according to documents released Crapo’s office released Monday to The Associated Press, three days after the Republican senator amended his Federal Election Commission filings to reflect losing the money.
The money went to a Nevada-registered company called Pyramid Global Resources, with an address three miles southwest of the city’s downtown. Its president, Fran Goldstein, hasn’t filed an annual report since 2009; Pyramid’s status has been revoked by the state.
Crapo’s former manager, Jake Ball, said in a sworn affidavit Crapo gave him the latitude to seek higher returns for campaign cash, though Crapo said he had no knowledge of this investment until the money was gone.
Ball, who resigned Thursday as U.S. Rep. Raul Labrador’s district director, gave the money on Sept. 22, 2008, to his friend, Gavin McCaleb. He signed a promissory note for his investment company, called Blueberry Guru, to repay the loan with an 8 percent annual interest rate. Instead, the money disappeared.
“Mr. McCaleb invested the money in a less than professional manner and, without knowing it, in fraudulent enterprises with persons who absconded with the funds,” Ball said in the affidavit from March 13.
In 2008, when Crapo’s campaign was between treasurers, Ball had authority to withdraw money and make investments with his signature alone.
Campaign finance ethics experts say giving such power to a single individual isn’t typical.
“It certainly does not reflect best practices,” said Paul S. Ryan, senior counsel for the nonpartisan Campaign Legal Center in Washington, D.C. Many campaigns invest donor money, Ryan said, but “typically safe investments are chosen,” not speculative ventures in Las Vegas at a time when the global economy was in unprecedented turmoil and property foreclosures were escalating to record levels.
“Campaign dollars are literally and metaphorically the most valuable resource that a candidate campaign possesses,” Ryan said. “They’re typically quite careful about managing their dollars.”
In a separate affidavit, McCaleb contends he placed Crapo’s money in an escrow account for Pyramid to access. His aim: To make a quick profit.
“I did not know who the investors were or how the money would be used,” McCaleb said. “Pyramid also agreed to generate a profit in less than two months.”
In the end, McCaleb said, he realized Pyramid’s agreement “was a fraud.”
“The escrow company refused to cover the loss,” he said in his affidavit.
McCaleb sought bankruptcy protection in 2011. Most of his businesses listed on the Idaho secretary of state’s website, including Blueberry Guru, are defunct.
Ball said he doesn’t have the money to repay Crapo’s donors.
“I am the father of four children, and, unfortunately, don’t have the means to reimburse the campaign for the loss,” he said in his affidavit.
On Monday, Ball said in an email to the AP he “made serious errors” he wishes he could reverse.
McCaleb didn’t return a phone call seeking comment.
Efforts to contact Pyramid’s Goldstein, as well as Joel Kay of Bellevue, Wash., the person listed as Pyramid’s secretary, were unsuccessful.
Neither has a listed number, and the company appears to no longer occupy the address listed with the Nevada secretary of state.
Crapo’s Washington, D.C., lawyer, Stephen Ryan, said those who took the money have “disappeared.” Though Crapo asked the FBI to investigate, he says the federal agency has since dropped the matter.
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