Federal Elections Committee Slaps Ted Cruz for Failing to Report More Than $1 Million in Loans

The Federal Elections Committee, like many in Washington, is a pretty partisan body, and usually the way it rules reflects this. But FEC issued a unanimous decision Thursday that U.S. Sen. Ted Cruz of Texas failed to properly disclose the source of four loans given to his 2012 Senate campaign.

In campaign filings at the time, Cruz represented the loans as personal funds given to the campaign without revealing where the cash came from. Last year, as Cruz unsuccessfully sought the Republican nomination for the presidency, The New York Times reported that the loans, totaling more that $1 million, came from Goldman Sachs, where Cruz's wife, Heidi Cruz, used to be an executive, and Citibank. The Cruzes took out three loans from Goldman Sachs worth $800,000 and used a revolving line from Citibank to provide $264,000 to Cruz's campaign.

Cruz's office did not respond to a request for comment.

Federal election rules allow candidates to loan unlimited funds to their campaigns. If those funds are loaned to the candidate by an institution, however, the source of the funds, the interest rate and the terms of the loan must be reported. Cruz didn't do any of those.

Instead, during the rollicking 2012 Senate primary, Cruz claimed that he'd liquidated his personal assets in order to better take on his chief opponent, former Texas Lt. Gov. David Dewhurst. Last year, after reports of the potential unreported loans first became public, Cruz attempted to explain the situation at a Republican presidential debate.

"Just about every lobbyist, just about all of the establishment opposed me in the Senate race in Texas, and my opponent in that race [Dewhurst] was worth over $200 million. He put a $25 million check up from his own pocket to fund that campaign,” Cruz said. He and his wife then “took a loan against our assets to invest it in that campaign to defend ourselves against those attacks."

Cruz admitted he'd made a "paperwork error" but called The New York Times article a "stunning hit piece."
The FEC's initial decision does not specify what penalty, if any, Cruz might face. Most FEC infractions, if they are punished at all, are punished with civil fines.