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Financial questions dog Maddox

Maddox's financial leadership scrutinized

By ADAM C. SMITH
Published June 27, 2005

Liens put a spotlight on the Democratic Party's fiscal operation under boss Scott Maddox.

Federal tax liens slapped on the state Democratic Party are threatening to derail Scott Maddox's fledgling gubernatorial campaign. But it's not the first time questions have been raised about the party's finances and accounting under Maddox:

Last year, the state Democratic Party had to revise federal campaign reports that indicated the state party had little involvement in the presidential race. Maddox said he learned of the error after an inquiry from the St. Petersburg Times , though the Federal Election Commission had twice sent the party notices about the party's reporting problems.

Senate Democrats this year complained that Maddox spent more than $120,000 they raised for the party without consulting them or explaining where the money went. Maddox said any money raised for the party went to appropriate purposes.

Also this year, the party had to revise state and federal campaign finance reports to reveal what it paid individual staffers. Under Maddox, the party improperly stopped reporting individual salaries. He blamed a software error.

Maddox raised eyebrows in early 2004 when the party reported paying nearly $123,000 to Governance Inc., Maddox's consulting company. Maddox explained that he had reimbursed himself for party expenses he paid on his credit card and said that he'd let party officers know beforehand.

None of those instances became significant controversies, and state parties grappling with arcane campaign reporting requirements frequently amend their reports. But combined with failing to do what most every small business in America does - pay federal withholding taxes - Maddox faces a potentially devastating perception problem about his management ability.

For a candidate touting his executive experience and financial management of the party, this was hardly the sort of publicity welcomed by a campaign trying to find solid footing.

Maddox had parted ways with his first campaign manager, so he faced this public relations crisis when he wanted to be focused on fundraising and had only his pollster to help him face a barrage of questions and bad headlines.

By week's end, Democratic-leaning Internet sites were filled with postings about "Maddoxgate," jokes that he should run for chief financial officer and speculation that his candidacy was doomed.

Even Gov. Jeb Bush weighed in: "I feel bad for the rank and file Democrats who are expecting their leaders to do the basics. How could you not know you haven't paid your FICA and Social Security taxes? Hellooo? It's the craziest thing I ever heard," he told reporters in Tallahassee.

With help from the Democratic National Committee, the party paid off the $200,000 IRS lien that had frozen the Democrats' account last week. And even staunch critics of Maddox downplay the likelihood that the most serious concern of some party officers - that roughly $900,000 is unaccounted for - will amount to anything.

Still to be determined is how the looming problem of unpaid taxes escaped higher-ups in the party.

"It wasn't brought to my attention at any time," said Maddox, stressing that he still took full responsibility.

He said he worked to improve accounting procedures at the party, hiring several outside consulting firms to help assist with or take over accounting and payroll activities. Under Maddox, for instance, the party spent more than $50,000 for accounting help by Conspectus Inc., a company led by Scott Bakotic, a friend and former business associate of Maddox's who also worked on Maddox's 2002 campaign for attorney general.

Such outside expertise apparently failed to stem problems that never came to Maddox's attention, however. Karen Thurman, state Democratic Party chairwoman, said the party's accountants warned of "severe" internal control problems in a March letter.

Debbie Griffin-Bruton, the party's comptroller, also knew of the IRS' concerns about unpaid taxes. She asked for more information, but no one knows what happened to the IRS' faxed response in September. Likewise, Thurman said a party volunteer on May 5 signed for a certified letter warning of the looming lien. No one knows what became of that letter.

Maddox and his allies dismissed the notion that the controversy had caused lasting damage to his campaign. The liens, he said, stemmed from a mistake by Griffin-Bruton, and he takes responsibility.

Griffin-Bruton, 51, used to be financial superintendent for Tallahassee Parks and Recreation department. Maddox, the former mayor of Tallahassee, hired her for the party.

It's not the first time the two have been in the news. There was a string of headlines in 2000 after Maddox caught a man urinating on his truck in downtown Tallahassee at 3 a.m. The Tallahassee Democrat at the time cited a police report about Maddox being with an unidentified woman, whom he identified as Griffin-Bruton. They had returned on a private plane from a business meeting in Daytona Beach, Maddox said, and he scolded the paper for implying anything improper might have occurred.

Political party finances are complex operations that involve state and federal laws, and a host of different interests funneling money into one central party. For instance, both parties have separate fundraising operations for their state House and Senate political operations, even though the state party leader ultimately has final say on spending.

State Sen. Steve Geller, D-Hallandale Beach, lamented that when he took over the Senate Democrats' campaign operation he discovered that more than $120,000 raised by Democratic senators that he hoped to spend for Senate races had been spent by the party. Geller, who is backing state Sen. Rod Smith for governor, said Maddox was within his rights to spend the money as he wanted, but he wished he had been consulted or at least received a clear explanation of where the money went.

Maddox faces a tough gubernatorial primary against U.S. Rep. Jim Davis of Tampa and Sen. Smith of Alachua. Maddox and some of his top supporters contend Smith's campaign fanned the story of the party problems to damage Maddox's campaign.

The controversy erupted just as Maddox had a string of fundraisers scheduled. The fundraising quarter ends June 30, and candidates are eager to show their viability with strong financial support.

The main effect of the controversy on his campaign, Maddox said, was to divert his attention and time from fundraising.

"I've got a record of achievement at the city of Tallahassee and I took a very bad situation at the state party and made it better," Maddox said.. "I'm going to move forward and talk about the issues that affect Floridians."

--Adam C. Smith can be reached at 727 893-8241 or adam@sptimes.com

[Last modified June 27, 2005, 04:43:04]