Romney spends big with aides’ firms
Mitt Romney’s campaign has directed $134.2 million to political firms with business ties to his senior staff, spotlighting the tightknit nature of his second presidential bid and the staggering sums being spent in this election.
Nine firms that are run by, or recently employed, top Romney aides have received almost a third of the $435.8 million that Romney’s campaign and a related fundraising committee have spent on operating expenses through Oct. 17, according to a Los Angeles Times analysis of federal election finance reports.
President Obama’s reelection campaign and a joint fundraising committee have paid about $5.8 million in consulting fees to companies with business ties to senior strategists, according to the finance reports.
The campaign finance reports show that this year’s presidential race has created a huge economic stimulus package for campaign operatives, whose total payday is often undisclosed.
Ryan Williams, a Romney spokesman, said payments to firms with connections to staff members were not only for consulting, but also were used to purchase a variety of services, including “polling, video production, political mail, get-out-the-vote phones, online advertising, website development, and budget and compliance management, among other things.” He declined to break down the specific amounts.
It is unclear from the finance reports how much the firms may be earning on commissions for producing or buying Web ads, among other tasks.
In its analysis, The Times did not include millions that both campaigns have paid consultants to buy airtime for commercials, money which is largely passed on to television and radio stations.
Obama and his Republican challenger are on track to raise $1 billion each for their campaigns and political parties this election. The record-breaking totals stem from a decision by the candidates to reject public financing, which would have capped their general election spending at less than $92 million. Obama laid the groundwork for the financial escalation when he made history in 2008 by becoming the first presidential candidate to turn down the public funds.
“These guys are spending as much in two weeks as we were spending in two months,” said Democratic consultant Tad Devine, who served as a senior strategist on the presidential bids of then-Vice President Al Gore in 2000 and Massachusetts Sen. John F. Kerry in 2004. “It’s a whole different level.”
An examination of finance reports shows that Romney and Obama both lean on trusted advisors to provide major services, such as media, polling and direct mail. But the Romney campaign has gone further, building its operations around a small group of companies that are either run by senior campaign aides or had employed them until they joined the campaign.
Two companies that Romney finance chair Spencer Zwick controls -- SJZ and VG -- have together been paid more than $22 million, which the campaign reported as payments for fundraising consulting.
VG, which stands for Victory Group 2012, was incorporated in April, the same month Romney secured the Republican presidential nomination. The company was registered by a corporate services agent, but campaign officials confirmed it belongs to Zwick. SJZ dates to 2005.
American Rambler, the company of top media strategists Stuart Stevens, Russ Schriefer and Eric Fehrnstrom, has been paid $23.6 million for services, including more than $6 million for strategy consulting and nearly $2.4 million for communication consulting.
The firm has also received $130 million to buy media time.
Its equivalent for the Obama campaign, GMMB, the Washington outfit of Obama’s longtime media strategist Jim Margolis, received $306.5 million for media buys. It was paid $2.1 million for consulting and production.
Overall, the Obama campaign has relied more heavily on outside vendors. That is partly because many of its top officials joined the president’s reelection effort from posts in the administration and do not have their own businesses.
Among the few staff-connected firms is Blue State Digital, the company of chief digital strategist Joe Rospars, which has received nearly $2.4 million for technology consulting and Web hosting. Senior strategist David Axelrod’s firm, Axelrod Strategies, has received $166,000 for strategy consulting. And his former firm, AKPD Message and Media -- where campaign strategist Larry Grisolano now serves as a partner -- has received almost $1.1 million for media consulting and production.
The structure of Romney’s campaign is largely a reaction to his consultant-heavy 2008 presidential bid, which aides said was plagued by turf wars between competing strategists. This time around, the infrastructure is centered on members of Romney’s inner circle who have long histories with the candidate, such as Zwick and Fehrnstrom.
“Romney clearly made a decision after the 2008 campaign to put together a smaller and more cohesive brain trust,” said Dan Schnur, a veteran GOP political strategist who now directs the Jesse M. Unruh Institute of Politics at USC. “The risk is that you may shut yourself off to outside perspective. But if you have a small group that you trust, it makes sense.”
Mark Kennedy, a former GOP congressman from Minnesota who directs the George Washington University School of Political Management, noted that campaigns doing business with firms owned by senior staff must have safeguards to ensure that the candidate’s best interests are being served.
“You make sure that key decisions are confirmed by people that don’t have a conflict,” he said.
The Romney campaign declined to answer questions about how it manages potential conflicts or whether senior advisors have a say over how much is allocated to their firms.
Several top officials oversee departments in which related firms provide services.
One of the campaign’s top vendors is Targeted Victory, a 3-year-old digital consulting firm whose co-founder, Zac Moffatt, is the campaign’s digital director. The Alexandria, Va.-based company has been paid more than $64 million for digital consulting and Web development.
A large share probably went to buy online ads, although those figures are not broken out in Federal Election Commission reports. Digital media consultants said commissions for such buys usually range from 10% to 15%, often not including fees for creative consulting.
Another official with business ties to a vendor is Rich Beeson, Romney’s political director. Before joining the campaign, he was a partner at a Minnesota-based telemarketing firm called FLS Connect, which has been paid $16.5 million.
The company also has a tie to Targeted Victory: FLS Connect partner Tony Feather is listed as the original manager of the digital firm, according to corporate paperwork filed in Minnesota.
Three staff-run firms share an address.
American Rambler, which was registered in May 2011, is located in a suburban office building about 20 miles north of Romney’s Boston headquarters.
Also there are two firms run by the campaign’s chief financial officer, Bradley Crate: Red Curve Solutions, a financial management firm that the campaign has paid nearly $1.4 million for compliance consulting, and Easterly Capital, a private equity firm that has received almost $1.5 million for the use of its corporate jet.
Times staff writer Anthony Pesce contributed to this report.
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