Monday, July 31, 2006

Claypool (D2 Day)

While I wait for a few stragglers, let's look at Forest Claypool's report. He shows $2,402,068 in receipts, $2,754,928 in expenditures, and $21,904.11 available. But what's interesting about his report is how he uses investments, and how that can inflate his totals. I don't mean to suggest he's deliberately inflating his totals, but his investment strategies result in somewhat inflated figures. For instance, $800K of his receipts are actually investmentsn rolling out of bank accounts. After that, his top donors (and it's odd to count investments as receipts, though for very valid reasons, that's how the Board of Elections wants to do it) include Fred Eychaner ($300K), Richard Dennis ($200K), $100K each from Bruce Rauner and Richard Dreihaus (who has his own honorary street designation in Chicago), and $75K from Sam Zell. On the expenditure side, $150K of his spending is actually money going into investments. So a more accurate statement of receipts would be $1.6M in and expenditures would show $2.6M spent.

The reason investments counts as an expense, and selling the investment scores a receipt, is that some investments lose money. And some PACs have lost funds by investing. Friends of Lee Daniels lost a bunch of money on a stock called Photogen Technologies, and Citizens for Lou Lang used to invest in penny stocks, most of which went up but some of which went down. If investments weren't counted as an expense, it would be harder to account for money lost that way. So funds invested are scored as an expense at the purchase cost, and when the investment is sold, or matures, it's listed as a receipt at whatever the PAC recoups. While that makes good sense to me, it also makes some PACs, including Claypool's and Gidwitz's, both of whom regularly rolled excess funds into and out of short-term investments, look a little odd.

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