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NRCC Finishes Ward Audit

Attorneys and accountants retained by the National Republican Congressional Committee have finished an audit aimed at identifying the extent and breadth of alleged fraud perpetrated on the committee by its former treasurer, identifying at least $750,000 in misappropriated money they say was stolen over seven years.

The former treasurer, Chris Ward, is under investigation by the FBI for allegedly wiring the money from NRCC and affiliated accounts to his personal account and to those of businesses he controlled. The unauthorized wire transfers, which began in 2001, continued until October of 2007, when Ward served as a consultant to the committee. He was fired when he failed to present an audit in late January.

Rob Kelner, the attorney who conducted the forensic investigation into the committee's finances, said Ward moved at least $725,000 in money that should have gone to the NRCC into his own accounts. Some of the money came from the NRCC's accounts, routed through an account set up for major fundraising dinners and into Ward's accounts. Other money was transfered from the NRCC through other committees Ward controlled, likely including candidates and incumbent members of Congress who were unaware of the transactions. And more was diverted directly from the dinner committees before ever getting to the NRCC's accounts.

Some of that third pool of money, Kelner said, had been destined for the National Senatorial Republican Committee; he estimated Ward stole an additional $28,000 from Senate Republicans. Kelner would not break down how much money came from which accounts, saying doing so could jeopardize the ongoing federal investigation.

Ward was able to divert the money because he was allowed to authorize wire transfers without another signature, Kelner said, suggesting that he acted alone. "We don't believe anybody other than Chris Ward, you know, conspired with him," Kelner said.

The forensic investigation lays the groundwork for a future audit, which is still to come. The audit will be necessary if the committee seeks a line of credit, which is common in advance of November's elections. The committee has been facing serious financial hardships already this year, reporting just $6.7 million in the bank through April, while their Democratic counterparts held over $53 million in reserve. In addition to the audit, Kelner said the NRCC has already begun implementing new safeguards, including creating a chief financial officer position, diverting more resources to accounting staff and by building a new written compliance plan that closes loopholes Ward was able to exploit.

More money heading to the accounting department is only the beginning of the financial toll the scandal has taken on the NRCC. According to Kelner, the committee has paid about $530,000 in fees to PriceWaterhouseCoopers, the accounting firm retained to conduct the investigation, as well as banks, a public relations firm and his law office, Covington & Burling, which has long served as the NRCC's legal counsel. The firm has aided the NRCC through the investigation in communications with the FBI, the Federal Election Commission and the U.S. Attorney's office.

Once detected, the fraud was easy to uncover, Kelner said. "He doesn't appear to have undertaken a particularly clever fraud," Kelner said of Ward. Ward started at the NRCC as assistant treasurer in 1995, before being elevated to the committee's top financial slot in 2003. He left the committee in July, 2007, though he continued to serve as a consultant in an advisory role until January, 2008.

After seeking a full audit of the committee's 2006 activity throughout 2007, two top Republican officials, NRCC executive director Pete Kirkham and Jeff Burton, chief of staff to Rep. Mike Conaway, the head of the organization's audit committee, confronted Ward in January in a series of what Kelner described as "heated and more pointed" interactions, leading to the confrontation, and Ward's firing, on January 28. Kelner said without their efforts, the fraud would have continued undetected, calling Kirkham and Burton the "unsung heroes" of the story.

The two discovered that Ward had forged audit reports throughout the decade, and that the last time an audit of the committee's finances had been conducted was in 2001. A partial audit was conducted in 2002, and no audits were conducted in the following five years.