Staff members who asked the leadership to address questions of how money was used say they were ignored or faced retaliation.
BY: Dan Browning, Pat Doyle, Staff Writers
At least two staff members have left the Minnesota Republican Party since February after they complained that the party misused employee retirement money, improperly reported its finances and ignored or retaliated against staff who reported the problems.
The departures included former finance director and GOP stalwart Dwight Tostenson. He wrote in a Feb. 15 confidential memo that state GOP chairman Ron Carey fired him after he repeatedly pressed the chairman to address what Tostenson regarded as serious financial problems in the state GOP office.
"Since I started reporting these suspected violations, I have felt increasing harassment and other types of retaliation," Tostenson, the party's chief fundraiser, wrote in the memo to the party's executive committee.
Carey on Friday denied any retaliation and said any problems identified in the memo have been fixed.
"We've looked at all the issues that he raised, and where there was corrective action required, we took corrective action," Carey said. "Dwight and I came to a mutual, amicable agreement for our separation."
Tostenson's four-page memo detailed his longstanding complaints and efforts to get Carey to resolve them. In it, he urged the committee to direct Carey to conduct a full investigation and audit. The Star Tribune obtained a copy of the memo.
Carey said Friday that he has asked the committee for permission to commission an external audit.
The controversies arise as the party is gearing up for the 2008 election season, when it will play host to the Republican National Convention and attempt to reverse its setbacks of last November, when the GOP suffered heavy losses in legislative contests and a drubbing in a U.S. Senate race while narrowly reelecting Gov. Tim Pawlenty.
Carey, who's running for reelection this week as party chairman, blamed the leak of Tostenson's memo on political enemies within the Republican Party who are out to get him on the eve of the Republican state central committee meeting.
But he didn't accuse Tostenson of having political motives for writing his memo.
Retirement deposits disputed
A key element of Tostenson's memo deals with his accusation that the party appears to have violated federal law by repeatedly delaying the deposit of employee payroll contributions into their retirement accounts. He said the "misappropriation" helped cover party expenses before the money was deposited.
"As reported on our payables at the state executive meetings last summer there was as much as $12,000 not deposited at any one time," he wrote. "This represented months of paycheck withholdings by the Party which had not been deposited within the 30-day legally required time limit."
The party offers Simple Individual Retirement Accounts for some employees. Federal law requires that money deducted from employees' checks for those accounts be deposited as soon as possible, and in no case later than 30 days after the month when it was withheld.
In cases of tardy deposits, employers may be required to make the plan whole by paying back any lost investment earnings. If they had mixed the employees' retirement money with general operating funds they could be required to pay an excise tax.
Party records show that money was withheld for employee retirement plans from September 2005 through May 2006, but Federal Election Commission (FEC) records reflect no deposits into the accounts during that period. In June 2006, the party made two makeup payments totaling $12,243 into the accounts.
The delay in depositing the money could have benefitted the party by giving it temporary access to the employees' funds.
Carey didn't explain why the retirement money wasn't deposited promptly.
"There seemed to be some gray areas as to what was the requirement," Carey said. Asked to explain the gray areas, he said, "I really would prefer not to get into the weeds on something like that.
"We investigated what the requirements were and made sure we were immediately in full compliance with that," he said.
Carey did not directly respond to Tostenson's claim that the employees' money was used temporarily to cover party expenses.
He characterized Tostenson's Feb. 15 memorandum as a rehashing of problems resolved in the summer of 2006. However, Tostenson's memo says the complaints were unresolved after the November election, and FEC records reflect no deposits in January 2007 into retirement accounts. On Feb. 9 - the same day Tostenson says he was fired - the party recorded an atypically large deposit, according to FEC filings.
Carey said Tostenson has agreed the problems were resolved, and cited a March 13 letter from Tostenson to the executive committee. Tostenson said in the letter that he was confident Carey and a party lawyer "are addressing all matters raised within my memorandum ..."
Tostenson declined to elaborate on his memo Friday, but said: "Do I stand by my memo of Feb. 15th, 2007? I will tell you ... I stand by my memo and the information that is contained in it."
In addition to raising concerns about retirement accounts, Tostenson's memo said Carey was warned numerous times that the party:
- Understated its debts - "$100,000 plus" - on FEC reports and to the state campaign finance agency.
- Delayed payment of staff expense reports and commissions.
- Failed to make timely payments to vendors.
A GOP source who talked to Tostenson about concerns raised in his memo said the party is required to report overdue bills as debts and obligations on FEC reports, and did not always do so.
Carey said "We feel like we're compliant with FEC regulations." The FEC, he said, has "... brought nothing to our attention that we are out of compliance in this area."
In his memo, Tostenson also urged the party leaders to hold "those responsible for any illegal activity accountable, to minimize the Party's political and legal liability."
He wrote that suspected illegal activities were brought to Carey's attention numerous times since May 2006. "He asked me to wait until after the election, at which time he assured me he would correct the numerous issues," Tostenson wrote.
After the November election, he said, Carey gave him permission to send documents to the party attorney supporting his claims. Two weeks later Carey told Tostenson that they were cutting his pay by 40 percent, which Tostenson believed was retaliation.
Carey did not directly answer questions about the alleged retaliation.
Watercooler discussions
Another staff member who left the party after raising concerns was Larissa Presho, a former finance assistant, who worked more than a decade for the party. In a Jan. 16th e-mail to Carey and other party leaders, she raised serious concerns about the behavior of the deputy treasurer, Marina Taubenberger.
The newspaper obtained a copy of Presho's e-mailed memo. In it, she said that Taubenberger had encouraged her to mislead state revenue auditors and also encouraged her and another employee to mislead insurance auditors.
Her e-mail says employees did not carry out Taubenberger's suggestions on insurance and taxes. Carey said the party did nothing improper.
Presho also wrote that she refused an offer of $5,000 from Taubenberger to marry a Colombian living illegally in the U.S., so that he could remain in the country.
Carey said he discussed this immigration matter with the party's legal counsel. "We didn't feel like we had any obligation to pursue this," he said. "It's something that I don't think is relevant to the operation of the party. I mean, there's watercooler discussions about a lot of things that people have on personal issues."
Asked about Tostenson's memo, Taubenberger declined to comment and referred a reporter to the party. Taubenberger voluntarily left the party organization in mid March, the party said.
Presho voluntarily resigned a month later. She said party leaders never asked her about the January e-mail.