Wagner finances: legal, risky
Campaign funds put in investments
Pittsburgh Post-Gazette
In what stands as a legal but risky practice, Pennsylvania gubernatorial candidate Scott Wagner has routinely invested campaign funds into a brokerage account, netting him a few hundred thousand dollars but raising questions about how he manages his finances.
The practice came to light Wednesday morning after a user on Twitter — a Philadelphia-based lawyer representing Democrats — pointed to a line item in Mr. Wagner’s most recent campaign finance report: a loss of $631,050 characterized as a “decrease in value of excess campaign funds invested in brokerage account.”
Similar line items on four of Mr. Wagner’s previous reports showed he has received increases in value of invested funds totaling more than $2.9 million since the beginning of 2017 — which, along with the $600,000-plus loss and a drop of $1.4 million in May, has left him with net gains of more than $840,000.
The Wagner campaign said he has invested only his own campaign contributions into the brokerage account — and none straight from donors. Mr. Wagner has self-financed much of his gubernatorial campaign.
“No donor money was used in that account [besides Mr. Wagner’s], and the account has netted hundreds of thousands in increases throughout the campaign,” campaign spokesman Andrew Romeo said. “Harrisburg’s money managers can actually learn a thing or two from Scott about how to grow money in the stock market.”
Mr. Wagner has been advised that the practice is legal, his spokesman added, a fact that was verified by the Pennsylvania Department of State. The state’s election code permits campaign committees to receive investment returns on accounts “provided they are properly reported,” said department spokeswoman Wanda Murren.
It is “unusual” to see campaigns invest funds, said Aubrey Montgomery, a principal with the strategic fundraising firm Rittenhouse Political Partners. The risk is too high, she said, and the short nature of campaigns requires money to be moved quickly.
“Because it’s so difficult to raise money, you don’t want to risk principal,” Ms. Montgomery said. “More commonly, you’ll see campaigns move money into a shortterm savings account that has very small returns, a couple percentage points or less.”
Investing campaign funds is an acceptable practice, “if you’re set up to do that and have a tolerance for risk,” she said.
It is more common at the federal level, though, she added, because large leadership accounts tend to amass more money. Rather than sitting on millions of dollars, they put it in interest-bearing accounts and use it to pay staff, for example.
Records indicate that as owner of the York-based Penn Waste, Mr. Wagner has amassed much private wealth. Court filings from 2012 placed his net worth at $20 million as of 2010.
The latest campaign finance report also lists loans to his campaign from his brokerage account totaling more than $1.3 million from January 2017 to March 2018. Those loans haven’t been paid back.
Ms. Montgomery said Mr. Wagner would have to pay taxes on the dividends. Once a campaign starts to sell assets or make income off of the campaign itself, it’s all taxable, she said. Mr. Wagner has not released his tax returns to the public.