That accounting shuffle, first reported by The Daily Beast, has given the Montana candidate a way to fund his campaign against incumbent Democratic U.S. Sen. Jon Tester with money given by donors above the individual campaign contribution limits.
Campaign finance watchdogs said Thursday that what Rosendale is doing is unusual but legal, and effectively raises contribution limits from $5,400 to $8,000 for some donors.
"This is a legal form of money laundering in order to help a handful of wealthy donors get around federal contribution limits," said Brendan Fischer, an attorney with the Campaign Legal Center, a non-partisan group focused on campaign finance, voting rights and other issues.
It would be illegal if the donors knew that Rosendale planned to use their money for his 2018 campaign instead of paying down his previous campaign debt, Fischer said.
Montana Democrats cried foul and said Rosendale is skirting campaign finance rules.
"This kind of deceptive tactic is par for the course for Matt Rosendale," said Brooke Bainum, spokeswoman for the Montana Democratic Party. "It's no surprise that an out-of-state guy depending on out-of-state special interests to prop up his campaign would resort to shady fundraising tactics that skirt the law to benefit himself."
Rosendale spokesman Shane Scanlon did not return a call or email for comment.
Rosendale, who is trying to deny Tester a third term, is furiously fundraising after an expensive four-way June 5 Republican primary depleted his campaign of cash. He has attracted the interest of Republican donors and outside groups as a challenger in one of 10 races in the nation where a Senate Democrat is defending a seat in a state won by President Donald Trump in 2016.
Trump himself heightened the interest in the Montana race after taking a personal interest in defeating Tester, who he blames for tanking his nominee to head the Veterans Affairs department, Ronny Jackson. Trump and his son, Donald Trump Jr., have each been to Montana to campaign for Rosendale after the president vowed that Tester would have "a big price to pay" for derailing Jackson over allegations that are now being investigated by the Pentagon.
Rosendale's accounting procedures appear to give him a way to help close the money gap with Tester, who had more than $6 million in cash as of May, by squeezing a little extra from big GOP donors.
In Rosendale's May campaign finance report, he re-designated $22,300 in contributions from nine donors as debt repayments for Rosendale's failed 2014 campaign for U.S. House. Two other donations totaling $6,900 had been requested for re-designation.
On May 14, Rosendale's campaign cut Rosendale a check for $32,831 to pay off a portion of the personal loans Rosendale made to the 2014 campaign.
The next day, May 15, Rosendale issued his Senate campaign a new loan in that same amount - $32,831.
Federal law allows candidates to re-designate excess contributions to pay off old campaign debt. Those donations count toward campaign contribution limits set for the 2014 election, meaning they don't apply to the 2018 limits. Rosendale doesn't have to return the money to donors that included Home Depot co-founder Marcus Bernard, Ariel Corp. executives Tom Rastin and Karen Wright and Rytec Corp. head Donald Grasso.
Six of the nine donors whose contributions were re-designated to the 2014 debt have now donated $8,000 to Rosendale's campaign this election cycle.
It's a loophole in the law that only can be exploited by candidates who can afford to lend their campaigns large sums of cash, then sit on that debt for years, said Fischer of the Campaign Legal Center.
"This scheme that was developed by Rosendale's campaign is something that can only be used by very wealthy candidates who had previously run for federal office," Fischer said.
The campaign still owes Rosendale $176,863 for personal loans, according to campaign finance reports.
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