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Mike Pence used campaign funds to pay his mortgage — and it cost him an election
Mike Pence was a young lawyer on the rise, challenging a longtime Democratic congressman in a Republican-leaning Indiana district.
And then, scandal.
Campaign finance records from the 1990 effort showed that Pence, then 31, had been using political donations to pay the mortgage on his house, his personal credit card bill, groceries, golf tournament fees and car payments for his wife.
The spending had not been illegal at the time. But it stunned voters — and undermined Pence’s strategy to portray the incumbent, Rep. Philip R. Sharp, as tainted by donations from special-interest political action committees.
“It was a brazen act of hypocrisy,” said Billy Linville, who was Sharp’s campaign manager. “It was a bombshell, for sure. . . . Without question, he may well have won the election if it had not been for that.”
Pence’s early stumble proved to be a defining moment, prompting a period of public remorse that helped create the wholesome image many Republicans now say makes him an ideal running mate to counterbalance the bombastic Donald Trump.
In the months after that 1990 defeat, Pence waged a statewide apology tour and disavowed negative campaigning. He told a local reporter that using campaign funds for personal expenses had been “an exercise in naivete.”
Pence’s 1990 race also led to key changes in campaign finance policies. Experts say that subsequent rules passed by the Federal Election Commission barring the use of campaign funds for personal needs were the direct result of ethics concerns raised by Pence’s actions.
Jason Miller, a Trump campaign spokesman, said that Pence had done nothing wrong in the 26-year-old episode and that the FEC had determined that he was “100 percent compliant with the law at that time.”
Pence first challenged Sharp in 1988, losing to the then-seven-term incumbent by more than six percentage points. Pence’s line of attack was narrow, mostly focused on the support Sharp received from PAC money.
But that campaign provided early hints that Pence was willing to go for the jugular. One Pence mailer depicted images of a razor blade, white powder and rolled-up cash, and declared: “There’s something Phil Sharp isn’t telling you about his record on drugs.” The brochure left readers hanging until a subsequent page: “It’s weak,” the ad read, using letters formed in powder.
The Washington Post obtained a copy of the brochure from Sharp’s archived papers at Ball State University in Muncie, Ind.
Two years later, Pence tried again, promising to focus on issues Indiana voters cared about and accusing his Democratic opponent of favoring big government. Pence wanted to win so badly that, according to a local newspaper report at the time, he kept a sign in his office that read “congressman in training.”
When news of Pence’s campaign spending broke, his opponent made the most of it. Linville, Sharp’s campaign manager, held a news conference, waved Pence’s campaign finance reports in the air and declared, “If you’re giving money to Mike Pence, you’re paying his mortgage.”
According to FEC documents, Pence spent a total of $12,867 from his 1990 campaign account for personal expenses, including seven installments of his $992 monthly mortgage and his wife’s $222 a month car payment.
Pence was unapologetic at the time, telling reporters that he had taken a 30 percent pay cut to run for office and needed the money. “I’m not embarrassed that I need to make a living,” he said.
“He doesn’t come from a wealthy family. He’s not gentry,” added Pence’s campaign director at the time.
In an interview, Sharp said that argument now makes some sense to him as a way to allow people of modest means to run for office. But, he said, at the time, voters were surprised by the uncommon practice. “This was using other people’s money that was supposed to go for the campaign and not your personal enrichment,” Sharp recalled.
With his election chances in doubt, Pence hit back hard at Sharp.
Phone banks supporting his candidacy used callers who posed as members of environmental groups, telling prospective voters that they had shifted their support from Sharp to Pence because the congressman was selling his family farm in Illinois to become a nuclear waste dump, according to news reports at the time.
Pence also ran a television ad in which a man dressed in stereotypical Arab robes and sunglasses and effecting a fake thick Mideast accent thanked Sharp for ensuring U.S. reliance on foreign oil. The ad drew protests from Arab American groups and was denounced by Indiana editorial boards.
Sharp recalled this week that the ad backfired on Pence, turning off independent voters who Pence would have needed to persuade to abandon the incumbent. “I think I generally was viewed as pretty vanilla, Midwestern,” Sharp recalled. “I think that was viewed as just over the top.”
Pence lost the race by 19 points.
The fallout from the campaign misfire lingered. The Democratic Congressional Campaign Committee had filed a complaint during the campaign with the FEC over personal spending by Pence and three other Republicans who ran for office in 1990.
“These were important cases,” recalled Lawrence Noble, who served as general counsel to the FEC at the time. “They showed that a real problem existed and caused the commission to deal directly” with regulating the use of campaign funds for personal use.
Three weeks after the election, the FEC deadlocked in a 3-to-3 vote over whether to pursue the matter. But the debate led to a larger discussion of the issue of campaign funds and personal ex­penses.
The Fix's Chris Cillizza explains why Gov. Mike Pence (R-Ind.) was the best vice presidential pick of the candidates Donald Trump was considering. (Peter Stevenson/The Washington Post)
The commissioners had been guided by a legal analysis written by an FEC staff attorney saying that the rules prohibited incumbents but not challengers from using excess campaign funds for personal use. The Pence-friendly opinion was written by Lois Lerner, who years later became an official at the Internal Revenue Service, where she has faced persistent criticism from Republicans over her handling of the tax status of conservative groups.
The commissioners — three Democrats and three Republicans — voted unanimously to begin a process to rewrite rules to ban the personal use of campaign funds by all candidates.
“It was a landmark issue,” recalled Trevor Potter, who joined the commission in 1991 and helped shepherd in the new rules.
Miller, the Trump campaign spokesman, pointed to the FEC’s proceedings to underscore that Pence had done nothing wrong.
“The nonpartisan Office of General Counsel at the FEC reviewed them, and the complaints were dismissed,” Miller said.
Pence, who had incorporated his deep Christian faith into his campaign, also had to deal with the repercussions of his negative efforts, which had hurt his public image.
He offered advice for how would-be candidates could avoid the financial pinch that led him to tap campaign funds for personal expenses: “Don’t quit your day job.”
As for the negative campaigning, he expressed regret. He told the Daily Journal of Franklin, Ind., that the nuclear-waste-dump phone calls had been “a manifestly dumb idea” and declared that “personal attacks are not a legitimate part of a campaign.”
Linville, Sharp’s 1990 campaign manager, recalled that Pence wrote Sharp a lengthy personal letter of apology. In 1991, Pence published an open letter to state residents called “Confessions of a Negative Campaigner” in the Indiana Policy Review that bluntly stated “negative campaigning is wrong.”
He laid out principles that he believed should guide future campaigns. The first: “A campaign ought to demonstrate the basic human decency of the candidate.”
Jose A. DelReal in Muncie, Ind., contributed to this report.
4 common mortgage errors and how to avoid them
Many people make expensive, easily avoidable mistakes when shopping for a mortgage.
“Borrowers who don’t do their homework often end up paying more than they should, and in some cases that extra cost can really hurt,” says Paul Sian, a real-estate agent and lawyer with HER Realtors in Cincinnati. A study from the Consumer Financial Protection Bureau (CFPB) concludes that many consumers don’t shop for mortgages, and they tend to get their mortgage information from lenders and real-estate agents, who aren’t impartial.
According to Sian, borrowers tend to fixate on the home’s purchase price, followed by the interest rate. But factors like closing costs, the loan’s total price, whether the loan is fixed or variable and whether the borrower is required to get private mortgage insurance can dramatically alter what borrowers end up paying.
Here are four common mortgage errors and tips for avoiding them.
Shopping just one lender
Whether it’s a new car or the latest gadget, consumers know it pays to shop around for the best deal. But half of mortgage borrowers consider just one lender or broker in their shopping process, according to the CFPB study.
“It is a good idea to shop around for mortgages in order to get better rates,” Sian says. “Sometimes large banks and lenders don’t offer the best rates that can be had. Additionally, some lenders add in fees. While the final fees do show up at the end, many borrowers don’t understand the fees and accept them as the cost of getting the loan, even though they could’ve avoided those fees by shopping around.”
Failing to seek objective info
When questions about mortgages come up, borrowers typically turn to their lender, broker or real-estate agent. While those are good sources, the CFPB found that many borrowers could benefit from seeking out additional, objective sources of information, such as housing counselors and news sites.
“Borrowers should seek a range of information, but each source should be vetted thoroughly,” says Greg Cook, a senior loan officer with Platinum Home Mortgage in Temecula, Calif. “Borrowers should remember that the right answers to their questions are often determined by the specifics of their individual situation.”
While Cook understands that many borrowers, especially first-timers, ask friends and family for advice, he says those sources are often unreliable because what works for one person may not make sense for their friend. News outlets, on the other hand, can be good places to get a “30,000-foot view” on the topic, but, Cook says, they won’t shed much light on an individual borrower’s situation.
As for housing counselors, Cook says they can be a valuable resource, but often their expertise is limited to lending programs, meaning they can help borrowers discover what types of loans are available, but they won’t necessarily have insight into which lender is the right choice.
Not learning about the process
Talk to homeowners and they’ll likely tell you about how complex, confusing and time-consuming the mortgage process can be. Knowing that, it’s certainly a good idea to arm yourself with as much knowledge about borrowing as possible. But amazingly, the CFPB found that about half of borrowers “aren’t very familiar with the process” and 14 percent were “not at all familiar.”
“A good mortgage (specialist) will lay out the process for you in a very clear manner,” says Elan McMillin, a mortgage banker with USA Mortgage in St. Louis. “The borrower should receive some sort of outline that details step by step what is expected of them during the process and the details of what is required from application to close. If the lender can’t provide an outline like that immediately, then it may be time to shop for another lender.”
But the problem may not be with the lender, according to Cook, who says it’s surprising so many consumers don’t know more about the process, given the abundance of information out there.
Focusing on irrelevant factors
Given that so many borrowers look to a single lender when shopping for a mortgage, it’s not surprising the CFPB found that many borrowers often pick lenders based on geographic proximity, a pre-existing financial relationship, or other factors, like reputation, that may not be relevant to the loan’s total cost.
But the best deal isn’t necessarily the lowest rate, according to McMillin, who points out that different loan products may have the same rate but substantially different costs, which underscores the need to learn about the variety of loans available.
Mike Pence used $13k of campaign funds for mortgage, golf fees during 1990 congressional bid

Who’s crooked now?

During a failed 1990 congressional run, Indiana Gov. Mike Pence, Donald Trump’s newly announced running mate, used nearly $13,000 in campaign funds for a slew of personal purposes, including paying down his mortgage and covering golf tournament fees.

The then 31-year-old lawyer didn’t break any laws at the time — but Pence’s questionable ethics outraged voters and ultimately prompted the Federal Election Commission to crack down on politicians who abuse their campaign funds, the Washington Post reported.

“If you’re giving money to Mike Pence, you’re paying his mortgage!” Billy Linville, campaign manager for Pence’s rival, incumbent Democrat Philip R. Sharp, screamed at a 1990 press conference after news of the spending spree broke.

Donald Trump trots out Mike Pence in official VP announcement

Pence eventually lost in a landslide — an outcome directly related to the shady spending, Linville said.

“Without question, he may well have won the election if it had not been for that,” he told the newspaper in a new interview. “It was a bombshell, for sure.”

According to 1990 campaign finance records, Pence used $12,867 from his campaign account for personal expenses. That’s the equivalent of about $23,700 in 2016.

The payouts included seven $992 mortgage payments and seven of his wife’s $222 car payments. More cash went to buy household groceries, pay off Pence’s credit cards and even cover the costs of participating in golf tournaments.

Trump officially picks Indiana Gov. Mike Pence as running mate

When news broke before the election, Pence stood by his spending habits. He had taken a significant pay cut when he backed away from his job as a lawyer to run for office, he claimed.

“I’m not embarrassed that I need to make a living,” he told reporters at the time.

But Sharp’s campaign harped on the issue, claiming it showed a dirty, crooked side to the young Republican — and the incumbent Democrat went on to win in a 19-point victory over the challenger.

After losing, Pence apologized for the dubious spending, calling the gaffe “an exercise in naiveté.”

Donald Trump and Mike Pence discontinue widely mocked logo

The scandal also prompted FEC commissioners to reevaluate spending rules. While the agency deadlocked on whether to investigate the shady spending of Pence and other Republicans during the 1990 election cycle, it unanimous agreed to rewrite the rules for the future.

Using campaign money for personal expenses is largely prohibited now, although some exceptions exist. Candidates are still allowed to collect salaries from their campaigns.

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