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September 18, 2010
G.O.P. Insider Fuels Tea Party and Suspicion
By JANIE LORBER and ERIC LIPTON
WASHINGTON — In the days leading up to the Delaware primary, Sal Russo hosted a radio fund-raiser, organized a political rally and pressed the case with reporters that Christine O’Donnell was the Tea Party’s choice for the United States Senate. He also set off what he calls a “money bomb,” pouring at least $250,000 into television and other advertisements promoting the little-known candidate.
With Ms. O’Donnell’s upset victory in the Republican primary on Tuesday, Mr. Russo, the chief strategist behind an upstart group called the Tea Party Express, had racked up another win.
But in becoming one of the movement’s most successful players by helping Tea Party favorites oust incumbents or trounce rivals in four states, Mr. Russo is also fast becoming among the most divisive.
Unlike many of the newly energized outsiders who have embraced Tea Party ideals, Mr. Russo, 63, is a longtime Republican operative who got his start as an aide to Ronald Reagan and later raised money and managed media strategy for a string of other politicians, including former Gov. George E. Pataki of New York. His history and spending practices have prompted some former employees and other Tea Party activists to question whether he is committed to, or merely exploiting, their cause.
Mr. Russo’s group, based in California, is now the single biggest independent supporter of Tea Party candidates, raising more than $5.2 million in donations since January 2009, according to federal records. But at least $3 million of that total has since been paid to Mr. Russo’s political consulting firm or to one controlled by his wife, according to federal records.
While most of that money passed through the firms to cover advertising and other expenses, that kind of self-dealing raises red flags about possible lax oversight and excessive fees for the firms, campaign finance experts said.
“They are the classic top-down organization run by G.O.P. consultants, and it is the antithesis of what the Tea Party movement is about,” said Mark Meckler, a national spokesman for Tea Party Patriots, a coalition of grass-roots organizations that does not endorse or contribute to candidates.
Mr. Russo’s group is also under attack from Republican Party leaders in Delaware, who have accused the Tea Party Express of improperly collaborating with Ms. O’Donnell’s campaign. Federal laws allow political action committees to support candidates independently, but they are not permitted to coordinate their spending with campaigns.
Mr. Russo dismisses all the criticism, saying he and his group have done nothing wrong. The Delaware party leaders are simply poor losers, he says, and his Tea Party critics are envious of his success.
“We are totally dependent on our donors,” Mr. Russo said in an interview. “We can’t do anything unless they support what we do.” He refers to some Tea Party activists who fault him over his political résumé as “nuts and crackpots.”
Friends credit Mr. Russo with knowing how to identify promising candidates and seize on hot issues. But they acknowledge that the Tea Party Express has brought real benefits to him, too.
“Sal Russo is a smart consultant and a great entrepreneur,” said Mark Abernathy, a Republican consultant in California who has known Mr. Russo for more than two decades. “He’s doing well by doing good.”
The rise of the Tea Party Express can be traced to tax-filing day in 2009, when disparate groups around the nation organized what they called “tea parties” to protest government spending.
Within a day, Joe Wierzbicki, a senior associate at Mr. Russo’s firm, Russo Marsh & Associates in Sacramento, sketched out a proposal to latch onto the nascent Tea Party movement, according to internal e-mails provided to The New York Times. He hoped to breathe life into the firm’s faltering political action committee, known then as Our Country Deserves Better. Donations to the committee, established during the 2008 presidential campaign in an effort to frustrate the ambitions of Barack Obama, had dropped significantly.
“Here is the plan I’ve been cooking up in my head,” Mr. Wierzbicki wrote in an e-mail to Mr. Russo. “About how we really make a big impact with the 2010 elections coming up, on the heels of the successful Tea Party push on April 15, and my desire to give a boost to our PAC and position us as a growing force/leading force.”
The plan called for a two-week road trip with an “awesome looking” luxury tour bus that would make stops in dozens of cities represented by members of Congress deemed big spenders, and therefore worthy of ouster, including two Democratic senators, Harry Reid of Nevada, the majority leader, and Christopher J. Dodd of Connecticut, who decided to retire this year amid faltering poll numbers.
Mr. Russo has long been a fiscal and social conservative (he rebelled against his Democratic upbringing by volunteering as a college student for Barry Goldwater’s presidential campaign).
In explaining the origins of the Tea Party Express, he said in the interview: “There were millions of people frustrated and angry at the country and the direction Barack Obama and Democrats were taking us. They were at home throwing their slippers at the TV news and mumbling to their spouse. If they got off the couch and engaged in political process, they could make a difference.”
Since last July, the Tea Party Express has made three bus tours around the country. And its fund-raising — much of it coming from donors contributing $20 to $50 — has proved remarkably successful, equipping Mr. Russo with a hefty war chest. As in Delaware, the group has moved into states and paid for media blitzes for favored candidates in the final weeks before voting.
During this election cycle, the Tea Party Express has spent nearly $1 million in Nevada alone — $547,000 to support Sharron Angle, the Republican Senate candidate, and $385,000 in opposing Senator Harry Reid, the Democratic leader. In Massachusetts, the group spent nearly $350,000 to back Scott Brown, now the state’s Republican senator.
The group’s reliance on Mr. Russo’s consulting firm, however, has drawn criticism from Tea Party activists and others.
Political action committees must spend money to make money, typically hiring staff members from the organizers who created the group. But it is less common for them to funnel most of their outside spending through a vendor controlled by a committee executive, as Mr. Russo has done.
Such a practice, while legal, can create a question about whether the committee — and its donors — are getting a fair price for goods and services, said Brad Smith, a former Republican appointee to the Federal Election Commission and now a professor at the Capital University Law School in Columbus, Ohio.
Mr. Russo estimated that Russo & Marsh, and his wife’s company, King Media Group, had been paid about $250,000 a year for their work with the Tea Party cause.
An analysis of Federal Election Commission records by The Times puts the total amount paid — for commissions, services and wages to executives and staff members — at nearly $700,000 in the last 20 months, or about 13 percent of the $5.2 million the committee has spent. (By comparison, media buyers for candidates’ campaigns typically take a 6 percent to 15 percent commission, according to one consultant.)
But the campaign finance records for the Tea Party Express also showed payments totaling more than $10,000 for stays at casino hotels, as well as bills for meals at expensive restaurants near Mr. Russo’s offices, including nearly $5,000 at Chops Steak House, which former staff members said the Tea Party Express frequented after work.
“I was kind of shocked,” said Kelly Eustis, who served as political director at the Tea Party Express until leaving last fall. “It kind of turned me off.”
Mr. Russo disputes that there was any lavish spending. “There have been a lot of cheap shots taken,” he said. “This has not been a profitable activity for us. We have plowed every penny back into this thing.”
He seems unfazed by the Federal Election Commission complaint made by Republican Party leaders in Delaware. Tom Ross, the state Republican Party chairman, charged that Mr. Russo and his team had improperly arranged for Ms. O’Donnell to speak during at least two Tea Party events in the week before the election, held closed-door meetings with Ms. O’Donnell and solicited donations to turn over to her campaign.
“Silly, silly, silliness,” Mr. Russo said dismissively.
Now, Mr. Russo is charging ahead, making plans for a fourth bus tour and gearing up for the general election fight in Alaska, Delaware, Kentucky and Nevada, among other states.
“What’s success for the Tea Party Express? I would say we’ve already achieved it,” Mr. Russo said. “Because today you can’t find a candidate running anywhere in America — Republican or Democrat — that doesn’t sound like they belong to the Tea Party movement.”
Derek Willis contributed reporting, and Kitty Bennett contributed research.
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