Cruz’s Senate-bid loans undisclosed to federal agency
He borrowed as much as $750,000; will amend reports if needed, he says
SAN FRANCISCO — Republican presidential candidate Ted Cruz said he’ll amend finance reports from his successful 2012 Texas Senate bid, if necessary, to show that he used loans to cover campaign costs.
Cruz made the comments Wednesday after a New York Times report said he and his wife, Heidi, obtained a low-interest loan from Goldman Sachs Group Inc. — where Heidi Cruz holds a managing director position in Houston — in the first half of 2012. The loan was not disclosed in his Senate campaign-finance reports.
Around the same time, Ted Cruz took out a separate loan from Citigroup Inc. The funds from the two loans totaled as much as $750,000 and increased to a maximum of $1 million, according to the Times.
A spokesman for Cruz’s presidential campaign, Catherine Frazier, acknowledged that the loan from Goldman Sachs was a source of money for the Senate race. Frazier added that Cruz also sold stocks and liquidated savings, but she did not address whether the Citibank loan was used.
Candidates for political office are legally required to disclose their campaign funding sources with the Federal Election Commission.
According to a review by the Times, personal financial disclosures that Cruz filed with the Senate do not show a liquidation of assets that would have accounted for all of the $1.2 million he spent on his campaign.
Cruz has paid off the loan from Citibank, the Times reported, but still owes between $50,000 and $100,000 on the amount the couple borrowed from Goldman Sachs. Both loans carried interest rates of roughly 3 percent, according to the Times.
Cruz sought Wednesday to downplay the reporting failure as a clerical error.
“It is an inadvertent filing question,” he said. “The facts of the underlying filing question have been disclosed for many, many years. It is not complicated. Our finances are not complicated.”
“Heidi and I, when we ran for Senate, we made the decision to put our liquid net worth into the campaign,” Cruz told reporters in Dorchester, S.C. “And so we did so through a combination of liquidating our savings, through a combination of selling assets, and then we had a brokerage account that has a standard margin loan, like any brokerage account had, and we borrowed against the stocks and assets we had under ordinary terms.”
If the loans weren’t reported as required by the FEC, he said, “we’ll amend the filings. But all of the information has been public and transparent for many years, and that’s the end of that.”
The federal guide to campaign-finance reporting for congressional candidates states that if the original source of money for a candidate’s personal loan was a margin loan or a line of credit, it must be disclosed.
“Bank loans to candidates and loans derived from ad- vances on a candidate’s brokerage accounts, credit cards, home equity line of credit, or other lines of credit obtained for use in connection with his or her campaign must be reported by the committee,” according to the guide.
Frazier, the campaign spokesman, said the failure to report properly the margin loan from Goldman Sachs was “inadvertent.” Frazier said there had been no attempt to hide anything.
“These transactions have been reported in one way or another on his many public financial disclosures and the Senate campaign’s FEC filings,” she said.
Mark Costiglio, a Citigroup spokesman, declined to comment, as did Andrew Williams at Goldman Sachs.
In recounting the decision to put all of their savings into the campaign, Cruz said in a 2013 Times interview that Heidi Cruz immediately agreed to his proposal, even though he was trailing in the polls and still viewed as a long shot against Lt. Gov. David Dewhurst, who spent $24 million of his own money on the race.
Cruz said he and his wife liquidated their “entire net worth” to fund the senatorial campaign, raising the total funds to $1.2 million — “which is all we had saved.”
Heidi Cruz, who is on leave at Goldman Sachs, later suggested that the reality was more complicated. She told Politico in 2014 that she thought they should apply “common investment sense” and not use their own money for the campaign “unless it made the difference” in winning. The article did not mention anything about loans from banks.
In an interview with Bloomberg in March of last year, Ted Cruz took aim at Goldman Sachs as being a beneficiary of “crony capitalism.”
“Because, like many other players on Wall Street and big business, they seek out and get special favors from government,” Cruz said of the New York-based investment bank. “I think they’re entitled to practice their business, but without subsidies or special benefits.”