With two weeks to go until a primary election he was fated to lose, Rep. Madison Cawthorn (R-NC) was already underwater. His campaign held more than twice as much debt as it had cash on hand, the donor well was dry, and he and his staff were months into a madcap spending streak that one campaign source called “baffling.”
And now, after indeed losing that primary, there’s no money to pay the piper.
Specifically, there’s no money to repay the supporters who donated hundreds of thousands of dollars in advance to Cawthorn’s election efforts beyond the primary—to the general election he now won’t be competing in.
Cawthorn is required by law to refund those donations. Instead, according to a campaign source, the campaign already spent the money.
The public doesn’t know any of this yet, however, because the Cawthorn campaign is now a week late in submitting the quarterly Federal Election Commission report that would disclose the collapse. That delay will already trigger an automatic fine.
The breach of fiduciary obligations follows a string of personal and professional embarrassments that hounded the one-term congressman across the weeks and months leading up to his primary defeat—accusations of insider trading, multiple alleged ethics violations, unforced public gaffes, and photo and video leaks designed to humiliate him.
But the campaign’s financial washout is more than another embarrassment; it’s against the law.
“Nobody ever did the math, which baffled me because the spending was so outrageous,” the campaign source told The Daily Beast.
This person pointed to a spree of frivolous charges over the last year that all accelerated into 2022, such as $1,500 in “egregiously” frequent trips to Chick-Fil-A, almost $3,000 at a place called Papa’s Beer, three separate charges at a high-end cigar shop, $21,000 for lodging in Florida and—the biggest drain—hundreds of thousands of dollars in sky-high consulting and fundraising fees, including for Cawthorn’s friend and campaign manager, Blake Harp, who was drawing a salary beyond federal limits.
Cawthorn couldn’t raise money to offset this burn rate, which was so high that, by May 5, the campaign had just 2 percent of the $3.7 million it had raised since January 2021. In truth, the source said, the campaign had been forced to tap its general election account months ago.
Federal election laws allow candidates to raise money for the primary and the general election at the same time. But candidates can’t spend the general election funds unless they win the primary, first. If you don’t win, you have to repay those donors.
Jordan Libowitz, communications director for Citizens for Responsibility and Ethics in Washington, told The Daily Beast that there’s not much wiggle room, and Cawthorn will likely face consequences.
“There are few more ironclad rules in campaign finance than you can’t spend general election funds in a primary,” Libowitz said. “There are strict limits on how much may be given and spent in each. If Cawthorn spent funds raised for the general during the primary and made no attempt to refund the general donations, he’ll likely be in a lot of trouble with the FEC.”
According to available data, Cawthorn’s jilted donors include friends and neighbors in western North Carolina, nearly three dozen retirees from Bakersfield to Boca Raton, a former Army major, billionaire GOP megadonors Bernie Marcus, Steve Wynn, John Childs, and H. Ross Perot Jr, and powerful Republican colleagues, including political committees tied to House Minority Leader Kevin McCarthy and Rep. Steve Scalise (R-LA).
Cawthorn owes them $220,080.85. As of May 5, the most recent snapshot available, his campaign had a little more than $137,000 on hand, and owed $325,000 in debt.
The campaign also failed to pay several vendors on time, according to two people with direct knowledge of the agreements.
Brendan Fischer, deputy director at good government watchdog Documented, agreed that the law is “clear-cut.”
“Candidates can’t use general election funds in the primary, and if the candidate loses their primary, they must return general election funds to maxed-out contributors within 60 days,” Fischer told The Daily Beast. “The law around this is clear-cut so the FEC will take violations pretty seriously.”
In Cawthorn’s case, the 60-day clock ran out last Saturday, the day after the report was due.
“There was just no money,” the campaign source said. “It was dollar-in, dollar-out. So if he loses it’s a really bad thing, and the only way to cover it is getting money straight from the candidate or treasurer.”
The treasurer, however, could also be on the hook for legal penalties. Cawthorn’s hired treasurer quit last Friday—the day the campaign report was due—with the freshman congressman personally taking his place.
But Cawthorn—who won a $3 million insurance settlement, and other payouts, for damages sustained in the 2014 wreck that paralyzed his legs—would also appear to have access to cash, and he has loaned his campaign money before. (Last week he dropped a $30 million lawsuit against his former best friend, who had been driving the car.)
Beth Rotman, director of ethics at watchdog Common Cause, told The Daily Beast there’s a third option.
“In practice, many people may start spending this money in the primary and pay it back; it’s a risk, but it may not be uncommon,” Rotman said, pointing out that the Cawthorn campaign can raise money to pay down its debts. “He needs to make this right by fundraising, and a lot of rules require that he do that staying within contribution limits.”
In essence, Cawthorn would be asking donors to pay his other donors for him. And the pool of enthusiastic Cawthorn supporters would appear limited, especially considering his top contributors are the people on the payback list.
Another option: Start a new campaign and forward the money.
The campaign source told The Daily Beast that this idea had been discussed internally, but Cawthorn balked.
“He didn’t want to run,” the person said.
On May 17, Cawthorn conceded the primary to state senator Chuck Edwards before all the votes were in. Two days later, he posted cryptically on Instagram, calling for “for Dark MAGA to truly take command” and including a list of right-wing figures he admired.
“This list includes the lion share [sic] of figures that came to my defense when it was not politically profitable,” Cawthorn wrote.
Among them was GOP strategist Alexander Bruesewitz. Cawthorn owes him $2,100.