Libertarian Party: More Questions Surface About Michael Cloud’s Payment As Vendor

Simpsons

This was posted by Starchild as a comment to an IPR thread re: the Updates on Libertarian National Committee, Bylaws and Platform Committee, Budget and Audit

For background, please see here .

December 6, 2013 at 12:11 am

As I would expect is normal for an organization with a number of full time employees, a large portion of the matters we deal with on an ongoing basis in our operations concern staff in one manner or another.

There are concerns that we shouldn’t discuss certain personnel matters publicly lest we expose ourselves to legal liability, and while given the out-of-control legal system in this society I believe these concerns sadly have merit in certain specific situations, it is clearly unrealistic and detrimental to the interests of our party for everything that relates to staff to be kept secret.

I have attempted to get advice from our general counsel and input from other LNC members about which specific types of information regarding staff need to be kept secret, but no one who knows or claims to know has volunteered this information to me.

In fact, LP chair Geoff Neale specifically instructed our in-house lawyer Gary Sinawski to ignore my questions. I believe this was exceeding his authority as chair, but even if I wanted to compel Gary to give me advice when he chooses not to do so, I don’t know of any way to do this short of a vote by the entire Libertarian National Committee.

In the meantime, Audit Committee chair Aaron Starr sent the following additional material to members of the LNC a couple days ago. Neither he nor anyone else including counsel has told us this needs to be kept secret that I am aware of, and the bulk of the Audit Committee report has been leaked already anyway along with numerous comments posted here by others, so I am going to go ahead and post this in the interests of disclosure and accountability ahead of our December 7-8 meeting in Dallas this weekend.

My fear is that some LNC members will seek to have the entire conversation about the Audit Committee report in secret without disclosing anything. If someone convinced me we face a great legal risk by having a public conversation on the matter I would be more willing to entertain that course of action, but my sense is that the secrecy is as much about avoiding embarrassment and maintaining insider exclusivity as anything else — and these do not strike me as good reasons not to let our members know what’s going on or have an opportunity to weigh in on the matter.

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On Nov 30, 2013, at 3:31 PM, Aaron Starr wrote:

Members of the LNC and LNC General Counsel Gary Sinawski,

In his role as counsel for the LNC, I am including on this email LNC General Counsel Gary Sinawski so that he is aware of these issues and can offer his legal advice.

Since the time the Audit Committee submitted its Second Interim Report to the LNC, another detail has come to our attention that we did not notice in time to include in our second report.

Before the 2012 audit even began, Mr. Cloud disclosed to the LNC some information which seems to contradict his invoices, as well as the statements later made by Ms. Howell during the audit.

For background, the LNC’s Policy Manual discusses Conflict of Interest in Section 2.01.2. It reads as follows:

Each LNC Member and each Party officer or employee shall disclose to the LNC situations in which such person’s own economic or other interests, or duties to others, might conflict with the interests of the Party in the discharge of his/her duties. Any such disclosure shall be made at the earliest opportune moment, prior to the discharge of such duties and clearly set forth the details of the conflict of interest, in a written disclosure statement provided to the Secretary. No LNC Member, Party officer or employee shall: (a) transact business with the Party unless the transaction is fair and equitable to the Party; or (b) use information gained in the discharge of Party duties to the disadvantage of the Party.

The Secretary shall maintain a register of all declared potential conflicts of interest by LNC members. This register will be presented and distributed to all LNC members at each regular LNC meeting.

As a result of this policy, during the July 15, 2012 LNC meeting, time was allowed for each person to provide the Secretary with the appropriate disclosures. Below is a transcript of a portion of that meeting, and the matching audio is attached for your own verification of its accuracy.

LNC Secretary Ruth Bennett: Mr. Cloud?

Michael Cloud: I am the President of the Center for Small Government. We don’t have any financial relationship yet to the Libertarian Party, but I anticipate either lending or renting mailing lists so that we can cross mail – so that we can harvest some of our names into the Libertarian Party. That’s number one.

Number two is, although I am not on the board of the Advocates for Self Government, I’ve had a very, very close relationship, long time, with the people running the organization. And I believe that Advocates has a relationship with the LP with the World’s Smallest Political Quiz. I don’t know if there’s any monies involved. I needed to put that on the table.

And third is, I expect to be vendor to the Libertarian Party for fundraising. And in order to alleve (sic) any potential conflicts of interest, I’m charging under market rates for the fundraising I will do – under what the normal pay is for those, so that the question simply doesn’t arise whether or not you’re getting value for your dollar.

Geoff Neale: Mr. Lark, you have a question?

Dr. James Lark: Yes, please excuse my incredible ignorance. In terms of providing below market rates, is there any possible FEC question? You are a member of this board. I would assume that there probably isn’t a problem, but if you are in some sort of vendor capacity, is there a problem if you are providing services to the LNC at below market rates? You may want to just look into that and see if there is some sort of implication by virtue of federal law.

Michael Cloud: Well then, let me rephrase is that I am providing services at WalMart rates, rather than Neiman Marcus, for our fundraising.

What we want to bring to your attention is that Mr. Cloud’s disclosure in July of 2012 indicates that at that point in time he “expect[ed] to be” a vendor. Expecting to be something is a hope for a future situation that is not yet true. Mr. Cloud did not say he was at that time a vendor who had already reached an agreement with the party on payment terms and was already performing services under that agreement. One could reasonably infer from his statement that he had not yet performed paid work.

However, Mr. Cloud’s invoices make clear that he charged for work done prior to July 15th, 2012 at which time even he apparently did not yet consider himself to be a vendor.

His first two (summary, not detailed) invoices amounting to $33,500 were not presented and paid until October 2012, and those invoices state that they are for work performed from May 15, 2012 through October 31, 2012. No details of the work performed were provided on those first two invoices. The latest long-after-the-fact reconstructed invoice created to support his work shows that he billed $7,429.70 in gross fees and commissions (before discounting the amount to the $7,311.85 billed) for work performed from May 18 – July 15, 2012.

Contrast Mr. Cloud’s July 15, 2012 statement with Ms. Howell’s written statement to Chairman Neale on August 13, 2013 during the audit:

In December of 2011, then-Chair Mark Hinkle and LP Convention Chair Ruth Bennett asked Michael Cloud to do the marketing for the 2012 national convention, despite the fact there was no budget allocated for marketing it. Michael obliged and also refused to be paid for this work. He worked voluntarily for LP HQ from December through early May of 2012. Most of his help involved writing fundraising letters/registration appeals for the convention with the aim to make it profitable. He also reviewed the fund-raising letter I wrote in Jan-Feb and came up with the teaser for the envelope, “The Ron Paul Effect.” He also reviewed and offered edits for a few other pieces we wrote such as blogs and LP News. I didn’t keep track of the specific pieces he helped with on a volunteer basis during this time.

Shortly after the convention, we agreed to his doing paid work for headquarters and to terms of payment. He did this work for the period between mid-May and end of 2012. The terms were:

Fundraising letters: 15% of gross after subtracting $1000, plus $1000 flat fee.
Press releases: $500
LP News issues – review and edits: $500 per issue
Email fundraisers: 10% of gross online donations (not including membership/renewals).

Ms. Howell’s statement above asserts that he only worked as a volunteer through early May of 2012, but shortly after the convention in May, “we agreed to his doing paid work for headquarters and to terms of payment. He did this work for the period between mid-May and end of 2012.”

Ms. Howell indicated that Mr. Cloud already was a vendor, with agreed upon terms, already performing the contracted work well before July 15, 2012.

These conflicting statements cannot both be true. It isn’t likely that in July 2012 Mr. Cloud didn’t know he was already a vendor, had already agreed to terms, and had already performed work for which he was owed. Did Mr. Cloud misinform the LNC about his status at that time, or else was he not yet a vendor, the undocumented vendor agreement came after July 15, 2012, and he then back-billed for work performed before he became a vendor?

Because there was no written contract for this work, the Audit Committee is unable to determine which of these conflicting timelines is accurate. We are unable to determine when Mr. Cloud ceased doing volunteer work and when he became a vendor to whom payment was due. If his vendor agreement came about after July 15, 2012, then some of the items on the reconstructed detailed invoices would not have been owed to him, as they predated the vendor relationship.

At this time we would like to remind you of something we did note in our Second Interim report. On page 7 of that document we noted that the most-recently-reconstructed invoice that was produced on September 2, 2013: “included items Mr. Cloud had previously agreed to do for free before he became a paid vendor. These were related to promotion for the 2012 national convention, and the new invoice suggests he was owed for these under the terms and payment rates of his post-convention vendor agreement, but suggests that Mr. Cloud simply chose not to bill for them.”

On that invoice, Mr. Cloud backdated his payment terms to include $8,250 worth of work (eleven pieces at $750 each) he had previously agreed to do for free between February 14, 2012 and April 30, 2012, even though Ms. Howell’s statement was that “he worked voluntarily for LP HQ from December through early May of 2012,” so it is not unrealistic to question whether he again chose to bill for work between May 15 and July 15, even if it pre-dated his agreement to become a vendor.

Based on Mr. Cloud’s statement indicating that he was not yet a vendor as of July 15, 2012, we are amending section 1.10 of our Second Interim report to include the bracketed, underlined language below.

1.10 CALCULATION OF COST PAID PER WORD (BOTH AUTHORED AND/OR CO-AUTHORED)

Leaving aside for the moment that the Audit Committee cannot substantiate the dollars raised by Mr. Cloud through email fundraising, it is claimed that $216,106 was raised from all of his writing efforts based on our count of 22,488 words being written, which supports the payment to Michael of $39,466.50 in gross fees and commissions (before discounting the amount to the $38,800 billed). [If one were to characterize the time prior to July 15, 2012 as volunteer work, then $172,005 was raised (before printing, mailing and other fundraising costs) based on 18,884 words written for $32,036.80 in gross fees and commissions billed by Mr. Cloud. The actual bills and payments amounted to $38,800.]

However, of the total revenues generated, $76,867 (over 1/3) was from work that cannot be substantiated in the emails staff provided to us. If you review the chart provided in the Exhibits you’ll find that there are 11 items for which no documentation was provided to support work the LNC paid for. There is no substantiation for those 4,589 words written, no substantiation that three issues of LP News were edited and therefore no substantiation that $13,252.85 in gross fees and commissions (before discounts) were earned by Mr. Cloud. [If one were to characterize the time prior to July 15, 2012 as volunteer work, then $45,096 (over ¼) of the revenues cannot be substantiated. There are 6 items for which no documentation was provided. There is no substantiation for 2,434 words written, no substantiation for two issues of LP News edited and therefore no substantiation for $8,522.65 in gross fees and commissions earned out of the $32,036.80 in fees claimed as earned by Mr. Cloud subsequent to July 15. The actual bills and payments amounted to $38,800.]

Though the Audit Committee’s task does not include making judgments about how much a vendor’s work is worth, we will pass along to the LNC some additional data for your independent evaluations. Of the roughly $26,000 in fees the Audit Committee can substantiate, the Word document properties show around 3,900 minutes of time that these documents were open. We can’t be sure how much time Mr. Cloud spent working on these. (One can easily imagine that a person will often walk away from a document with it open on his computer while working on something else. One can also imagine that someone might spend some time not working directly on a document because there is thinking that goes on before writing commences. And there is work that is done after completing the document.) Using this amount of time as the best available reasonable gauge of the amount of work done, results in a rate of pay of approximately $400 per hour. [If one were to characterize the time prior to July 15, 2012 as volunteer work, then of the roughly $23,500 in fees that we can substantiate, the Word document properties show around 2,800 minutes of time. As such, the recalculated rate of pay exceeds $500 per hour.]

The Audit Committee requests that the National Committee answer the following questions at its upcoming December 7-8 meeting in Dallas:

· Given that Mr. Cloud indicated that he was not yet a vendor as of July 15, 2012, as of what date does the Libertarian National Committee believe that Mr. Cloud ceased being a volunteer and became a vendor?

· According to the Bureau of Labor Statistics (http://www.bls.gov/ooh/media-and-communication/writers-and-authors.htm), the median annual wage of writers and authors was $55,420 in May 2010 (or $26.64 per hour). Freelance copywriters tend to earn more to cover office costs, self-employment taxes and other costs. According to the 2012 Writer’s Market, a freelance advertising copywriter charges between $35 and $150 per hour. Depending on when work as a vendor began, the Audit Committee can document Mr. Cloud working anywhere from 46 to 65 hours. Given the policy that no National Committee member shall “transact business with the Party unless the transaction is fair and equitable to the Party” and Mr. Cloud’s commitment to “providing services at WalMart rates, rather than Neiman Marcus” rates for his copywriting skills, what portion of the $38,800 paid to Mr. Cloud does the Libertarian National Committee consider to be a fair and equitable amount of compensation?

Respectfully submitted,

Aaron Starr, Chairman
Libertarian Party Audit Committee
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It appears we can no longer post photos and audio and video links in the IPR comments under this new format (I presume this has been discussed and explained elsewhere, but since I haven’t mentioned it previously, let me just say for the record that I vastly preferred the former look and feel of IPR before the change a couple months ago!). So you’ll have to take my word for it, for the time being, that the audio file of the July 15, 2012 LNC meeting that Aaron Starr attached to the message above contained a recording of a conversation which I believe to be accurately reflected by the transcript above, and which accords with my memory of what was said at that meeting.

Since we will be discussing the Audit Committee report this weekend, I’m interested in hearing from party members how you feel this situation should be handled. Especially if you are someone who does not post often, or has not posted previously on this topic.

Love & Liberty,
((( starchild )))
At-Large Representative, Libertarian National Committee

82 thoughts on “Libertarian Party: More Questions Surface About Michael Cloud’s Payment As Vendor

  1. Matt Cholko

    I prefer that we not make a mountain out of a mole hill. Cloud and Howell are not scumbag criminals, stealing from the LNC. At worst, they are irresponsible record keepers.

  2. Wes Wagner

    Matt

    That got caught lying about it … and when their first lies were discovered … they made new ones … and got caught lying again … What is seriously wrong with you .. are you hoping to get in on the action ?

  3. Shane

    First, since when is there an audit committee? Historically, we have been audited by an independent, third-party vendor. By allowing an audit by LP insiders, we’re opening ourselves up to a politicized audit — just as this appears. Aaron Starr knows very well that the most powerful position on the LNC is the treasurer’s seat and now with this committee, I’d argue that he created an even more powerful position.

    As for Cloud, let me say that charging a commission on direct mail fundraising is not an accepted practice. The Association of Fundraising Professionals forbids commissions as payments within their code of ethics for members — this is the leading organization for non-profit fundraisers.

    There are a number or reasons why commission-based fees are not accepted and in my opinion the number one reason is that erodes donor confidence. The second being that it provides less value to the organization.

    Owning a marketing agency myself that specializes in non-profit and universities, I go by a simple fee structure and ensures that my fees allow the clients to maximize their net while covering costs. It’s not a difficult task.

    My agency’s work has a consistent cost and my fees should not be weighed by performance. A smart marketer tests to insulate the client from risk with under-performing packages and when packages perform above expectations, that’s a bonus for the client and a reason to maintain the relationship with the agency.

    I know that certain LNC members are aware that percentage based fundraising is unethical as I’ve had the argument with them (and lost). This should be an eye-opener that this is not an acceptable business arrangement and the LNC should avoid commission contracts in the future.

  4. Wes Wagner

    Shane makes many interesting points, ones which would have come up if we had an open and honest search for a consultant for fundraising services, rather than engaging in a cronyistic hand-shake deal.

  5. George Phillies

    There has been an audit committee for a long time. The audit was done I gather by an accounting firm. Explaining the findings of the audit is in the remit of the audit committee. Certain members of the LNC vigorously support percentage commissions, and use fundraisers to raise money for ballot access this way, with a 40 (forty) percent or higher commission.

    Was the audit politicized? The part that was done has political consequences. The missing reviews, $5000 to a Republican State Party’s attorney and large sums out the door to Mr Starr’s LSLA, are perhaps more indicative of politics.

  6. Shane

    Thanks George. I never recall an audit being an issue or the results really discussed by the LNC — aside from the cost of the audit. I guess things were simple back then.

    On commissions for ballot access fundraisers, that was my issue that I lost on.

    Major gift fundraising is a different animal however, that is the duty of the chair and executive director — not a hired hand that is not on staff — far too many risks in data security alone.

  7. Stewart Flood

    The job of the audit committee is to negotiate the contracts with outside auditors and make sure they report back in a timely manner. They have never in the past actually audited anything, because it is outside the scope of the committee. That said, in the end we may be fortunate that they went outside the parameters and found something. But they were on a witch hunt anyway, so they’d have found something, no matter how significant. This appears to be significant.

    Commissions for this type of fundraising are unethical, especially if the person getting the commission is a member of the board of the organization and has direct influence on the program. I was told (as a member of the convention committee) that he was volunteering his services, since we had no money to promote the event. I had no problem with someone volunteering their time and energy, since those of us on the LNC were doing the same. Hearing now that Mr Cloud decided to charge the LNC after the fact places his integrity in serious question.

    It becomes even more serious when you add the fact that the work that was done as a volunteer became billable work after he became a member of the LNC. This ranks up there with the scandal in 2011-2012 involving tens of thousands of dollars going to an LNC member. Members (plural) of the current audit committee were involved in that incident. Fortunately, the money that Dr Phillies mentioned in his comment above was recovered in full.

    I am not saying this to defend Mr Cloud, but I suspect that members of the audit committee found it fortunate that they could paint over the first event by focusing the attention of the LNC on a scandal that does not involve them. Again, I am not trying to defend Mr Cloud’s actions.

    Both events are significant and show a serious lack of ethics by some current and past members of the LNC. The record shows that I and several others (a minority) voted against the first incident several times. I’m glad to see that Dr Lark questioned Mr Cloud’s statement in July of 2012. I wish more LNC members had been as concerned.

  8. Jill Pyeatt Post author

    Matt Cholko. this might not have become a big deal to me if it had been dealt with in a timely manner. However, it appears that, for some reason, Geoff Neale has seen fit to stop cooperating, and that makes those things that were questionable seem more important just because they’re not being addressed and dealt with. In my book, $38,800 is a lot of money. If the deal was completely on the up-and-up, the participants should have quiockly covered themselves, possible even apologized for their lack of professional behavior, and then gone on to other things. I don’t think we at IPR are the people who have turned this into a big deal.

  9. Shane

    Thanks, Stewart. I recall the incident you’re referring to and agree.

    George, the party was broke from 2002 to 2005. Had affiliates cashed outstanding UMP checks we would have been overdrawn by $20k on top of a few hundred thousand in past-due bills.

    By 2007, all of that was resolved and we were debt free with a good reserve.

    The systems and techniques put in place at that time (multi-touch/channel renewal series, pledge focus, urgent gram, etc.) have been carried forward from year-to-year and stabilized revenue. However, little progress has been made in increasing revenue and new donors beyond the churn rate.

    I read the recent postal solicitation by the LP on prospecting and it was so flawed, it was cringe-worthy. Sheer ignorance in the industry shone through the copy.

    If the LP does not want to fall back into a state of fiscal crisis, it seriously needs to bring on fundraising pros. I can’t say the very best are easy to find but with good contract structures the LP could retain several and test them against each other.

    If someone could get package performance reports to me, I can tell you at a glance if they are on par.

  10. Wes Wagner

    I entirely agree with Jill. If the people participating in it did not feel guilty, they would not be acting guilty. They would have likely just said, yes, amounts were paid — work was done, we didn’t document everything down to the T, it was a handshake deal, we still think the amounts in question were reasonable and fair. Etc.

    What they did instead is they kept trying to invent evidence that was exculpatory because they believed they were guilty of something. They failed on several occasions to true up that evidence.

    This type of behavior is indicative of mens rea and we are right to interpret it as such.

  11. Jill Pyeatt Post author

    “Consciousness of guilt” is what it’s called in the true-crime novels I read.

  12. Wes Benedict

    I write the fundraising letters. I do them myself because they seem to perform better than what the pros put together. I used to make a bunch of charts showing how good my letters did compared to others. You can find them a LP.org in the staff reports that are in the LNC minutes from 2009-2011. I believe today we have more money in the bank than ever in the history of the LP. Shane, if you have a good reference you could pass on to me for writing good letters, I’d like it. It may be my letters aren’t industry standard and people just donate anyway because they feel sorry for me. Or maybe they’re inspired by what I say. I don’t know. What do you think?

  13. Wes Benedict

    By the way, whenever I say “I wrote something”, that could mean “Art DiBianca” wrote it. I try to take credit for most of his great work — LOL.

  14. Stewart Flood

    Wes,

    I think that one of the reasons that your letters work is that they usually read like they have been written by a real person. They are not always “picture perfect” which gives them a more human touch than the letters that most professional fundraisers create.

    When someone reads your letters, they get the feeling that you aren’t just being paid to do it, but that you care about what you’re doing. In saying this, I’m certainly not implying that past EDs have not cared or that their letters were not effective. But you’re right: your fundraising appeals have worked well.

  15. Stewart Flood

    And this of course reinforces the point that the LP should not be paying outside consultants commissions to write fundraising letters. Yes, the letters raised money. But how do we know that letters written in-house would not have done better?

    And taking credit for all of the revenue that came in from the convention? Shameful. Look at the revenue claimed to have been raised by the letters promoting the convention. It is pitiful. Most of them brought in less than a thousand dollars. Most of the letters written after the convention, in the period when we traditionally receive most of our election-year contributions, appear to me to have raised money at rates similar or possibly even below prior election years.

    Which begs the question: was Mr Cloud worth what he was paid? Regardless of whether it was ethical for a board member to charge for assisting the party in raising money; regardless of whether it was ethical for someone to charge to do the job he was elected to do; regardless of whether it was/is a conflict of interest; regardless…

    …was it worth the price?

    I say no.

  16. Michael H. Wilson

    Wes Benedict’s letters would certainly work better if I had some money. Anyhow Wes you do good work with long hours and I for one appreciate that.

  17. Wes Wagner

    You can only draw on the same well so much before it runs out of water.

    I find the frequency of solicitations from the LP annoying.

    It is just one of the many ways they waste money that causes me to nor want to contribute.

  18. Joe

    Matt Cholko @ December 7, 2013 at 9:48 am wrote:

    “It seems to me that two people that know and trust each other made a handshake deal. I don’t see that as a big deal.”

    The big deals (there are more than one) is that:

    1) the bylaws require that contracts for this amount have prior review by counsel, and no such review occurred.

    2) the bylaws require such contracts to be in writing, and no contemporaneous written contract exists.

    3) no detailed invoices were submitted concurrent with payment (they were apparently recreated, at least in part, later)

    4) portions of those recreations were apparently altered by LP staff

    5) the nature of the work product itself is unclear, in some cases initially submitted as if authored by Mr. Cloud, then corrected for having been edited by Mr. Cloud or coauthored by Mr. Cloud and Ms. Howell.

    6) invoices have been provided (as recently as yesterday) for work performed prior to July 15 2012, on which date Mr. Cloud stated that he was NOT, but did expect to become, a vendor to the LP. (BTW: In this instance Mr. Cloud reminds me of President Clinton. Perhaps because he was not, at the moment of that LNC meeting when asked to disclose potential conflicts of interest, working on a fundraising letter, he could claim "there is no vendor relationship . . ."

    However, to then bill for work produced in the 10 weeks or so prior to that statement is . . . I'll leave it to the IPR reader to discern the most accurate descriptive term.

    7) there was no apparent prior or contemporaneous disclosure of this relationship or this contract, or the lack of that contract, to the LNC, for the dollar amounts involved, of the work product produced despite policies designed in the past to guarantee transparency in large dollar amounts.

    8) it also seems to me to be a big deal because of the past relationship of the parties involved, not only of their romantic one (for which, IMO, they should have each known there would be additional scrutiny for current financial transfers), but also for their past financial relationship — one where it appears Ms. Howell owed Mr. Cloud money.

    See: http://images.nictusa.com/cgi-bin/fecimg/?_21037163871%200

    and

    http://images.nictusa.com/cgi-bin/fecimg/?_21037221056%200

  19. Joseph Buchman

    Shane @ December 7, 2013 at 10:54 am

    “First, since when is there an audit committee?”

    It was, I believe, created during Geoff’s last term as chair (12 years or so ago?)

    Regardless, our job (as I understood it before putting my name in the ring for election to it) to 1) vette potential auditing firms, 2) negotiate the best deal, 3) be available to their auditors to answer questions, 4) be available to the LNC to answer questions about the results of THAT firm’s audit.

    As I understand it, what is now holding up the final report from that firm is our present inability to complete a couple of footnotes related to the work product provided by at least one vendor, and the financial statements regarding possible repayment of some funds (part of which has already occurred regarding rental (security) deposits which were inappropriately classed as compensation.

  20. Joseph Buchman

    Shane @ December 7, 2013 at 10:54 am wrote:

    “As for Cloud, let me say that charging a commission on direct mail fundraising”

    I want to be clear here. I DO NOT believe that is what happened. THAT IS INDEED what is claimed, but as, among other things, a coauthor of three editions of a college textbook titled “Broadcast and Cable Selling,” I have NEVER seen a “commission” which rounds to the nearest dollar amount, much less to the nearest $1,000 dollar amount. Nor have I seen a “commission” invoiced by the vendor.

    In this case the total revenues from the work product would be known to LP office staff, and then that commission calculated and paid. Those revenues did not accrue to Mr. Cloud, so . . . how could he know the basis for calculating said commission.

    The explanation is that they were told to him, and then he did the calculating. That’s possible but, IMO, not credible.

    The same seems to be the case in the FEC report cited above, where the commission about owed was a round $25,000.

    Only the two parties involved know what really happened here. Perhaps, indeed, it was nothing at all improper. Nothing short of an NSA level review could begin to prove that; and it is NOT the function of an audit to discern every motive, or every detail of every contract. IMO it IS the function of an audit to note the “red flags” of possible impropriety for the board, managers, members or others to then evaluate and correct, if needed.

    I believe we did that and did a good job. That said, I’m not unsympathetic to those who have concerns that the committee went too far, in part because when I began to have that concern, as well as other unrelated significant concerns, I bailed.

  21. Joseph Buchman

    Stewart Flood @ December 7, 2013 at 12:26 pm wrote:

    “The job of the audit committee is to negotiate the contracts with outside auditors and make sure they report back in a timely manner. They have never in the past actually audited anything, because it is outside the scope of the committee.”

    I agree and said so in an 02JUL2013 email

    “At this point there is, again IMO, sufficient evidence to report to the LNC as a whole concerns about some remunerations and contracts, and then having raised those concerns to consider our role fulfilled, and our authority more or less exhausted as it relates to the Audit Oversight committee. It also seems to me that there are issues here which might be best addressed, not only by the LNC as a whole, but also in convention next year. In short, I deeply respect and am personally aligned with Chair Starr’s desire for transparency here, I support his requests for information but do not believe we have the authority to demand the same. If I’ve misunderstood that boundary/role, please let me know.

    All the best,

    Joseph G. Buchman, PhD, MBA (finance),”

    The full email can be found here:

    http://www.independentpoliticalreport.com/2013/11/joe-buchman-responds-to-lnc-audit-controversy/

    Unfortunately, IMO, the LNC Chair directed staff, at least initially, to fully comply with all requests from the audit committee as if their jobs depended on it and off we went onto what was, IMO, a second, more detailed, apparently never-ending audit, or re-audit. (To be fair to the outside auditing firm, IMO, they did a competent audit. What is happening now was, I believe, beyond the scope of their contract and/or the scope of a normal audit.)

    It is, however, the kind of review of the financials and all vendor work-product work that the ED, Treasurer, Chair or LNC itself should be doing/should have done.

    “witch hunt” . . .

    “Commissions for this type of fundraising are unethical, especially if the person getting the commission is a member of the board of the organization and has direct influence on the program. I am not saying this to defend Mr Cloud, but I suspect that members of the audit committee found it fortunate that they could paint over the first event by focusing the attention of the LNC on a scandal that does not involve them.”

    As I am no longer on the Audit Committee, I’ll let those remarks stand with the assumption you are referring to the committee from after the point of time beginning when I resigned.

    🙂

    What I can say is I have neither the time, nor the technical abilities, to report an impression on the degree to which Mr. Starr has focused his attention, dedication and expertise on one area over another. To the degree I tried to be vigilant for that, I did not see it. The issues involving the Project Saratoga payments and contracts were, I believe, by comparison, far more transparent. I was present (and I believe I was blogging for IPR) during meetings where that contract was discussed, and then later when the payment was refunded.

    There was nothing equivalent, at least that I noticed, for the $38,800 we’re discussing here verses the $33,000 that was transferred there.

    If I’m mistaken on that, our current ED, or someone here will, no doubt, correct me!

    Joe

  22. Wes Benedict

    Joe writes: “1) the bylaws require that contracts for this amount have prior review by counsel, and no such review occurred.”

    Joe, I believe you got your first point wrong again (among others) because you have mixed up your facts. And this “scandal” doesn’t involve me.I didn’t work there then. But thanks for keeping certain people busy with this. Has kept them out of my hair for a while.

  23. Joseph Buchman

    Wes Benedict @ December 7, 2013 at 7:19 pm wrote:

    [Joe writes: “1) the bylaws require that contracts for this amount have prior review by counsel, and no such review occurred.” Joe, I believe you got your first point wrong again]

    Yes, yes. Our current ED is attempting to play the game that because no single payment to Mr. Cloud exceeded the Bylaws trigger of $7,500 that a written contract with prior review by counsel wasn’t required even for a 6 month total of $38,000+

    It’s this kind of equivocation, non-transparency, and game playing (not to mention the personal insults) that needs to stop.

    You have facts, Wes . . . cite them. If I’ve made a mistake here, I’d be truly grateful for being corrected, by you, or others.

    As I said to you earlier, after your characterization of me as a “UFO enthusiast” who sees things that aren’t there — there is indeed far more evidence of ET interaction with people of the planet Earth than there is of Mr. Cloud’s ability to produce a timely invoice.

    🙂

    See: http://citizenhearing.org/committee.html

    Meant with good humor, but if you don’t get it, or can’t as our new ED stop the kind of “business practices” in the LP HQ that wasted so much of MY time on the “audit committee,” this past year, then please don’t expect an even partial civil response from me in the future.

    BTW — Thanks for the letter that arrived today, once again asking me to renew my membership in the LP. Does every LIFE MEMBER get those, or just me? It’s a shame the LNC meeting was postponed. I had the tin foil I needed and intended to make a hat for (during) the meeting.

    Seems most of the LNC and its staff is in need of a sense of humor.

    Joe

  24. Joseph Buchman

    Stewart Flood @ December 7, 2013 at 4:33 pm wrote:

    “Which begs the question: was Mr Cloud worth what he was paid?”

    I asked a slight variation of that during the field work for the audit in mid May of one of the LP office staff. Namely,

    “Well, if that’s true, aren’t we losing money by not continuing to pay Mr. Cloud? Why did we stop paying him in January 2013? Are our revenues now going to tank?”

    That staff person’s response?

    “Mr. Cloud’s fundraising letters underperformed.”

  25. Joseph Buchman

    Michael H. Wilson @ December 7, 2013 at 4:51 pm

    DITTO!

    He deserves a chance to clean up the red flags the Audit Committee and others have raised. While I’d like to see the ad-hominem attacks (or at least the ones on me), he works hard, has demonstrated success in the past, and deserves a chance.

    To that end, I’ll say here: Wes, to the degree I’ve inappropriately made your job harder, I apologize. That certainly was not my intent.

    That said, really, there’s stuff in that Audit Committee report, as well as red flags raised elsewhere, that needs to be fixed regardless of the messengers or their political intentions.

    I did do my best to be fair here. I appreciated your comment regarding that, even if it came with a slap later in the same sentence.

    I do have my biases and have made them as transparent as possible and I did put a ton of work into what I thought was going to be a much different kind of service to the LP when I signed up for it. Then I quit. I even resigned a tenured professorship a dozen years ago. It’s what I do. As my former PhD advisor said, “Can’t you find a better battlefield tactic than just falling on your own sword?” I’m not especially proud of that, but I really wanted nothing more to do with the kind of crap I was being asked to look at.

    If you really feel I’ve done, or am doing, more harm than good here; let me know. I’ll mail back that lifetime membership card (both mine and the one I was sent for another member) and the pin, you can even keep the money.

    Joe

  26. paulie

    Joe,

    I recommend using something other than angle brackets to quote people. Since they are used in HTML tags, it could cause the software to misinterpret them as html tags and screw up your comments.

  27. Joseph Buchman

    paulie @ December 7, 2013 at 8:50 pm

    Thanks. I had to avoid that on the “old IPR” but forgot. And then noticed a bit earlier today that it wasn’t a problem with the “new IPR.” That said, I’ll try to remember >> and << is just an old habit, probably from when I was active on the Compuserve Forums!

  28. Joseph Buchman

    paulie @ December 7, 2013 at 8:55 pm

    “Regular quote marks should be fine. Or blockquote, or italics….”

    Yep. I’ll go with quote marks. Not sure how to get italics, except inside Site Admin as an Editor . . .

  29. Joseph Buchman

    Paulie — PS, looks like that may have happened in one of my responses to Stewart Flood. Am fixing that now. THANKS!

  30. Joseph Buchman

    OK, I think I’ve cleaned everything up. A significant portion of one earlier reply to Stewart Flood was missing/garbled, probably because of my use of angle brackets. Recreated that as best I could. Now back to the Platform Committee stuff . . .

  31. Stewart Flood

    JB: “As I am no longer on the Audit Committee, I’ll let those remarks stand with the assumption you are referring to the committee from after the point of time beginning when I resigned.”

    Absolutely correct. You didn’t like what the committee was doing and you resigned. Note that I said “some (plural)” rather than “all” or “the members”, which would have incorrectly included you as part of the witch hunt. Perhaps I should have said “all but one member, who resigned from the committee…” 🙂

    Regarding whether the events are similar:

    While the amounts are different, the incidents are identical in nature. In both, a member of the LNC received a “sweetheart deal.” In the first case, it was a puffed up proposal for vaporware that any customer with IT experience would have laughed out of the room. In the second case, it was a puffed up proposal for fundraising that any customer with marketing experience would have laughed out of the room. The numbers show that his appeals underperformed (as reported by staff), so he was clearly overpaid.

    It is sad to see the party fall victim to this type of internal corruption.

  32. George Phillies

    Stewart Flood writes: “Fortunately, the money that Dr Phillies mentioned in his comment above was recovered in full.” Errh, no, you were thinking of a different event than I was. Mind you, yours makes the point better than mine. I was referring to the issue that Mr Montoni regularly and correctly notes, namely that the LNC has legal ways of causing corporate money to be received for booths and then using it to pay for convention expenses; The money instead went to a non-FEC reporting libertarian organization, or so I am told.

  33. Joe

    SF “You didn’t like what the committee was doing and you resigned.”

    That is partly true.

    I remain of the opinion that through at least October 15 we did more good than harm (if any at all of the latter).

    I resigned largely because, although we were doing what needed to be done, I didn’t feel it was our job to be doing it.

    You could also say I resigned because I didn’t like what others were doing/had done — namely the lack of basic professional business practices that would have made an audit much easier, and much quicker than what was caused by a relative lack of transparency, delayed invoices (even as late as yesterday!), unclear work product, slowness and obstinance in responding to initial requests (especially prior to Chair Neale directing staff to comply) then slowness after that, and nothing after Geoff reversed course and pulled the plug.

    One of two precipitating causes for my resignation was what I considered to be a threatening phone call around 6pm pacific time on October 15 from Geoff Neale where he told me Aaron would be removed, Brett had agreed to resign when confronted with the inappropriateness of his service on the Audit Committee while being/after being a vendor (I was told Brett initially disagreed until confronted with the idea that Michael Cloud could have been elected to serve on the Audit Committee — and how a new policy would soon be approved, and easily adopted, to prevent any vendor from being so elected) and that I needed to prove I was not complicit in, nor aware of, their misdeeds, and I needed to do so immediately. He shared this by way of explanation of why my request to be included on the LNC Audit Discuss list had been rejected — because they needed to discuss the out of control audit committee. Additionally he told me that he had contacted the independent auditing firm directly to confirm that what we were doing was not appropriate, and that the audit for 2012 was going to be completed soon, with or without us.

    This was a violation of our independence (we were elected by the non-officers) that is perhaps the most egregious of the various inappropriate acts involved in this mess.

    I waited six days without mentioning this to anyone, even my wife; then decided to offer my resignation, rather than be the only member of this committee to go on into what was to have been the second year of my term.

    Additionally I had told the LNC during a conference call about the audit, one that neither Brett nor Aaron were on (and perhaps had not been invited to be on), that I shared their frustration at the delays, and that “If the audit is still going on in October, it will do so without me.”

    I felt I should keep my word in the matter.

    Bottom line, there is, IMO a culture of dishonesty that makes an audit difficult if not impossible, and there was a vacuum of oversight that this committee, inappropriately IMO. attempted to fill.

    That said, we did not create the vacuum, and whatever improprieties were conducted by the committee or its chair, Mr. Starr, pale in comparison to those who are currently the focus of that audit, as well as, IMO, the LNC Chair’s actions to try to force a completion of the 2012 audit by turning on alleged misdeeds by the three of us, rather than . . . elsewhere.

    Finally, my other concern is the non-transparent, page after page of payments to “Political Advisers” on the GaryJohnson2012 page at FEC.gov. I think this could reflect badly on the LP at large and indeed the other precipitating cause for my Audit Committee resignation was voicemail left on my personal cell phone from a collection agency threatening me with legal action involving an unpaid $9,000+ bill for a Twitter account (the third such collection agency that has contacted me this year for unpaid Gary Johnson campaign debts). I remember thinking that this is NOT the “Party of Principle” that I had joined and that I want nothing more to do with any of it. So on that impulse I sent off an offer of resignation to the Chair of the LNC. In retrospect, I wish I’d waited a bit and/or talked to Brett or Aaron first.

    I’m far from perfect. Am sure I could have done better. Am going to try to do so as interim chair of the Platform committee. Still don’t understand, at least not fully, why I do many of the things I do, and this resignation is surely one of them. But I hope the above helps explain things.

  34. Stewart Flood

    While Joe’s comment explains his actions, it leaves several unanswered questions. I’ve never had any reason to question his integrity, so I’ll start from a position of taking his statements as fact. This then leaves us with a number of questions and points to ponder, including:

    The chair appears to have already been of the opinion that Brett and Aaron had a direct conflict. What was the motive and/or reason behind insisting that Joe prove he was not involved? Anyone who was following the events during the last term would already know that Joe was not involved in any way.

    Note that Brett had already been approached about resigning from the committee. This shows more evidence of what I and others (vice chair of Ohio, former chair of Nevada, etc) have been pointing out. Brett has a vested interest in covering up the events of 2012. Why was he put on the audit committee, along with Aaron Starr who was one of his supporters and was directly involved in the affair?

    This “mole hill” as it was called by one person no longer looks like just a mountain to me, but more like a mountain range.

    As far as Dr Phillies’ comments about vendors goes, I was on the LNC during the 2008, 2010 and 2012 conventions and served on the convention oversight committee for the 2010 and 2012 conventions.

    My observations of the 2008 convention were that both the “spirit” and “letter” of the law were followed regarding vendors.

    I was directly involved in 2010 in the process (and meetings) where we were trying to get an outside entity to handle the vendor booths. It was a very difficult process. We went through several options before finally finding someone willing to run it. Again, both “spirit” and “letter” were followed. Nothing was done incorrectly.

    I do not have the same opinion of the 2012 convention, and I voiced my objection when the LNC voted to give the vendor space to the LSLA. There is a direct connection between the LSLA and the LNC. It was enhanced during the 2010-2012 term, when the LNC voted to grant the LSLA authority to directly appoint members of certain committees created by the LNC and that reported directly to the LNC.

    Because of this relationship, it is my opinion that there is not even the appearance of an arms-length transaction following either the “spirit” or the “letter” of the law.

    Of course I am not implying that the law is good, or that it is even constitutional. I do not believe that the LSLA should be directly appointing members of LNC sanctioned committees. I also do not believe that they should be managing the vendor booths at the convention.

    Remember, these are just my opinions. I am not an attorney. But I do know when the garbage needs to be taken out by the smell it makes in the kitchen.

  35. Stewart Flood

    You don’t see it all unraveling before your eyes right now?

    Actually, I haven’t had time. And the convention is still ten months away.

    To quote someone famous: don’t fire until you see the whites of their eyes.

    They know it is out there. They know that they can’t counter or even refute what I know. But I’m not even sure it will be needed. The current scandals are even worse than the ones you don’t know about.

    And remember, all I can expose is their techniques. Some libertarians might actually approve of the type of coercion and tactics that they use. Some may believe that it is just fine to hold “secret” dinners in advance of the meetings, where some members are literally handed instructions on what to do.

    Observers of the meetings have seen Mr Starr handing notes and instruction cards to certain members. Everyone has seen his takeover of the LSLA and the LNCC. Notice the appointments to the platform committee. Take a look at the states that have appointed members of the cabal, whether they are a resident of that state or OF ANOTHER STATE! (Interesting, isn’t it?)

    They are getting ready to take back control in Ohio. Will anyone be ready to challenge them?

  36. George Phillies

    Excellent idea, as you will scoop Liberty for America, whose headline this month reads

    “Buchman Resigns from LNC Audit Committee
    Cites “Culture of Dishonesty” “

  37. Michael H. Wilson

    One of the problems is the way the membership to the LNC is determined. The region California is in has two reps and two alternates. That is the only region like that. As I understand the bylaws they get that number because of the size of the California party. I guess that’s nice but California started out ahead to begin with. The state is the most populated on in the nation and the party membership should be larger than any other state’s membership. California is actually down in the middle of the pack when you look at the numbers per capita.

    This needs to be changed so that all states and regions are treated the same.

  38. Mark Vetanen

    Stewart Flood

    The kind of ‘machiavellian politics’ that are going on in the LNC are likely to not be supported by the membership for very long.

    It is likely that Cloud will file suit if he is not paid, it is likely that other prominent members will publish the details about the scandals, and it is likely opponents of this Corrupted Cabal will go to great ends to distribute this information in such a way that anyone who ever had any involvement with the LNC will learn of it.

    Even if Starr and his corrupted core of followers take back the LNC, they will only inherit a failing organization riddled with scandals. The support will massively drop off and competing organizations will rise up to eventually take over what once the LNC did.

    Its R[evolution] !!!

  39. George Phillies

    Lest there be any doubt, I was thinking of 2012. Perhaps at some point Mr Montoni will repeat his simple and clear explanation about committees in host cities.

  40. paulie

    One of the problems is the way the membership to the LNC is determined. The region California is in has two reps and two alternates. That is the only region like that. As I understand the bylaws they get that number because of the size of the California party. I guess that’s nice but California started out ahead to begin with. The state is the most populated on in the nation and the party membership should be larger than any other state’s membership. California is actually down in the middle of the pack when you look at the numbers per capita.

    This needs to be changed so that all states and regions are treated the same.

    Email Chuck, the bylaws committee might consider that.

  41. Wes Benedict

    Joe, you wrote:
    ” Our current ED is attempting to play the game that because no single payment to Mr. Cloud exceeded the Bylaws trigger of $7,500 that a written contract with prior review by counsel wasn’t required even for a 6 month total of $38,000+”

    Here’s page 33 of my copy of the Policy Manual (not the “bylaws” by the way):

    “The Chair shall approve any contract in excess of $7,500.
    All contracts of more than one year in duration or for more than $25,000 shall be reviewed
    and approved by General Counsel prior to signing by the Chair.”

    You are saying that amounts greater than $7,500 require review by counsel, but the policy manual says $25,000.

    Am I mistaken here?

    You get so many basic facts wrong, then draw false conclusions.

    Again, this controversy isn’t about me because I didn’t work here then. But I do suffer from the fallout and distraction (though partly benefit because it keeps certain people busy and out of my hair for a while). I get to look forward to being part of the Audit Committee controversy next year, since I work here now, and I know how Mr. Starr feels about me since I helped prevent his election to the Treasurer position, and since I often fought against his cohort Wayne Allyn Root.

  42. Stewart Flood

    Host committees and host cities are critical, but we have yet to take advantage of the idea. The FEC encourages it, and the Ds and Rs live by the concept. Denver had one, to an extent, in 2008. St Louis did not have one and neither did Las Vegas — in spite of the claims by certain former LNC members who live in the desert capital and the later promises made and not delivered on by another current LNC member from that city. Lots and lots and LOTS of promises. We would have entertainers, fundraisers, you name it! All bunk. He couldn’t even come up with a convention website after being given months to create it.

    Yes, if Starr regains control it will most likely be the end of the LNC as we know/knew it. And the party will be full of REPubLIBrats.

  43. Stewart Flood

    Wes,

    Don’t worry about it. None of us blame you. Oh…wait…we can blame you! If you hadn’t quit to get married this would never have happened!

    So yes, it was your fault for leaving!

  44. Stewart Flood

    From what I’ve read that IPR has published and from the knowledge I have of events — remember, this started during the last term — there was no contract. As Libertarians, that should bother us. Even on a small to medium size project, a contract outlines the responsibilities of both parties as well as the expectation of the intended outcome.

    A contract on this type of project just makes sense.

    The fact that this was done without a contract gives a bad impression to those who were unaware of what was going on. Even if there are no ethical or legal problems, it makes everyone involved look bad. We have no idea which board members may have known about this, so even the members of the LNC who were completely detached from it look bad — unless of course it is resolved at the meeting next week in a manner that serves the interests of the party and its members, and doesn’t just get swept under the rug.

  45. Michael H. Wilson

    I’ll jump into this fray with a comment I made some months ago, maybe even years ago. The office in D.C. has too much to do and not enough help. More work needs to be farmed out to the membership. We should have a set up similar to what Wikipedia has for maintaining their material. Volunteers should be recruited to help develop the issues papers, write news releases, training material and fund raising letters. It is insane to expect the national office to try and do what they are expected to do and not get burned out, make mistakes and find short cuts.

    I am not making excuses for anyone but if we can’t see the obvious we have a problem. We need to fix this problem. I have worked in too many large organizations and I have seen this problem on more than one occasion and it is one of the reasons we are not growing.

  46. Shane

    Michael, I’ve heard that from you for years and disagree. Unless you’ve worked in the national office, you really don’t know what the solution is — I’ll say that the success of the LP is not dependent upon the national office.

    Stewart, my company did the 2012 convention site at the last minute as has happened with every convention since ’04 or ’06. Not a big deal but I will say that 2012 was not a good experience. I don’t know why I got the call.

    Regarding other conventions, I disagree that 2008 was on the up-and-up. This is before your time but the LNC had a convention corporation that was grandfathered in with the FEC. The corporation was always chaired by the immediate past LNC chairman and activity was transparent to the LNC with any profits staying in the corporation to offset the next convention or buffer losses. It was a good, legal model but I believe it was abandoned in 2008 and we don’t know what happened to the profits.

    Wes, I recall your wolf-at-the-door letter and it was a good one — but you can only use that technique every so often and only if true (in your case it was). Joe S had one written years ago as well that blew the doors off. As far as performance, most of us only know “Big L” performance standards and unless we have the opportunity to go beyond party fundraising it’s not very competitive. If you split test the file each time (and you should always be testing something), you will be able to create a competitive program and lift results all around — and you will learn something each time you mail — if you’re not testing, you’re not marketing.

    Then you’ll know why your packages perform.

    But working with a consultant is still a good idea especially if you’re going to prospect. The LP doesn’t have the budget to test with volume and that’s the only way you can learn at a speed that keeps you ahead with results — knowing what lists perform, etc — and never trust the brokers, they’re not marketers.

    I don’t know of any folks I would recommend that don’t have a current conflict but will see if you’re serious. The best are snatched up well in advance of 2014. I would put it out there that you’re looking for copywriters, reach a fee agreement and start testing several of them head-to-head against your copy.

  47. Marc Montoni

    Phillies said:

    Perhaps at some point Mr Montoni will repeat his simple and clear explanation about committees in host cities.

    There have been several of these discussions, don’t know to which one you refer. A couple of examples:

    May 11, 2013

    May 21, 2012

    Was it one other than one of these?

  48. Shane

    Email is the easiest way to test. Use it to test your postal packages before they go out (especially in prospecting). On other elements, test everything. Recently I retested a simple change in font and found that donor conversion rates were lifted by 50%.

    When you stack your test results on everything you learn from your list, you can push your conversions up for a very high ROI.

    For anyone involved in direct response marketing, a great primer is Scientific Advertising by Claude Hopkins. While written in 1923, it’s the foundation to world class marketing that every advertising “giant” like Ogilvy built their careers on. Chuck, you may have already read it. If so, give it a deeper read.

    Back to the original discussion I don’t know if Cloud is a great marketer or not, I just take issue with copywriters taking a commission.

    I don’t know if the LNC or LSLA has done this in a while but I think it’s time to have a breakout session on fundraising that everyone can attend. I brought in a friend years ago to an LSLA/LNC meeting in Vegas to talk on fundraising and he’s one of the best their is — but their needs to be regular followup.

    If states can start testing and step up their operations, results can be shared and you can learn much more, much faster than national alone. You can also identify the best copywriters that are already in the party.

    I say we have another session on the topic at an upcoming meeting then follow that up with monthly calls.

  49. Michael H. Wilson

    Shane wrote, “If states can start testing and step up their operations, results can be shared and you can learn much more, much faster than national alone. You can also identify the best copywriters that are already in the party.”

    Thanks Shane. That is what I have been writing about for years. The states should be doing much of what goes on in D.C. from fund raising to recruiting. The national office should be developing written guides on how to do this and handing off the job to the states.

  50. Shane

    On that particular list, Courier vs. Verdana. Not too much of a surprise that Verdana won but that jump was. Sans-Serif always tests higher online, opposite for print.

  51. Columbo

    Just one more thing…

    Didn’t George Phillies in the past do some write-ups about the money Stewart Flood got when he was on the LNC? Wasn’t Stewart paid thousands of dollars to develop some kind of phone bank and crm system? Didn’t it crash like the Obamacare website the first time they tried the phone bank? Didn’t the LNC pull the plug on that project because Stewart never would finish the job? After thousands of dollars sent his way, the LNC had no finished product to show for it.

    As overpaid as Michael Cloud was, at least it seems that he did deliver some finished work product.

    With that history, isn’t it a little odd for Stewart to be talking about whether its ethical for another board member to be paid for work they do?

    And perhaps Stewart is so worked up over the LSLA wanting to create a crm system because he was afraid someone might actually make him look bad by successfully doing what he had failed to do?

  52. Columbo

    Just one more thing…

    Wasn’t Stewart Flood on some kind of LNC technology committee for years where he kept promising some new phone system he was going to make available that would save the state partys all kinds of money? Did that ever get finished, or was that just campaign talk? I do not know if there was any pay for that project. I hope not if it was not done.

  53. Stewart Flood

    Columbo,

    Since you’ve made a rather broad accusation, I will give you the facts:

    First, my system did not fail the first time it was used. The failure that day, after MANY successful uses of the software, was caused by too many users trying to register at the same time.

    The party was supposed to have obtained a larger and faster server to expand the capacity over my development machine, which I had estimated could handle about 100 to 200 simultaneous connections. The contract (yes, we had a contract) specified that the party was to pay for a server to run the software on, but they never did. So the failure of a server that was never supposed to be running in production was not an unlikely event.

    Approval for funding of a faster server was actually obtained a few weeks before the incident you refer to. Getting a server, configuring it, testing it…there wasn’t enough time to move to it before the event. Most of the last week was spent adding a number of last minute changes to the system to make it handle training for a function it had not been used for before, but of course the training never took place.

    As I said, there was no time to move to the new server. But since the event (voter id/polling) really only needed 50 users I was not worried. Someone was supposed to find the users and train them, but instead a video was produced, asking volunteers to sign up ON THE DAY OF THE EVENT. The member of staff given the task of managing the event wasn’t up to it. (No, this was not the ED) Someone outside of the party created the video. He is a very creative individual, who has since done a lot of great work for the cause.

    Unfortunately, the promotion of the event went viral. More than 1900 new users tried to register in a 10-15 minute period, which was more than we needed and more than a 2Ghz machine with 2GB of memory could handle. They also could not go through the training, since the event was completely unorganized.

    The users should have been obtained in advance. They were not. The event was on a Saturday, so no one was in the office. It was almost guaranteed to fail. I believed that I could have gotten it stable if given a few more minutes, but the political pressure was mounting rapidly and the event was cancelled.

    Because of the overload, several previously unknown software issues were uncovered. They were all minor timing errors that a faster server would never have encountered with that load. Modifications were made to the software over the next few weeks that addressed and corrected the issues and handled a heavier influx of new users registering and learning how to use the system.

    There were more than twice as many new users in that one afternoon than had signed up in total in the prior year and a half of use. Normally no more than one or two people would sign up in a day, if any signed up at all!

    But the political fallout of the event failing so visibly was too much. There were also unfounded and inaccurate accusations made that the LNC was doing something they weren’t allowed to do. We were polling, not doing get out the vote. It was a poll to gauge support levels and to id potential supporters of OUR candidate (who had not yet been selected).

    So the project was cancelled. I don’t blame the ED for making that decision. He did what he felt at the time was in the party’s best interest.

    Unfortunately, I had already signed a two year contract to rent the larger server, which then sat unused at an additional cost of about $8,000 out of my pocket for the next two years. I didn’t need it, other than for this project. I had plenty of capacity for my other customers. So it sat there. I was never reimbursed for the server that was not used.

    As far as money goes, after I was elected to the LNC I started donating back the money I was being paid. Of course I had to pay taxes on this money first, and we all know that political contributions can’t be deducted. Some went to national, while some went to state parties.

    The project also raised substantially more than I was paid, so it was a net profit for the party even if I had not donated the money back. I was informed at the 2006 convention after I was elected as an alternate to the LNC that there was no conflict being a vendor, but I still decided to donate the money back. Note that this is the opposite of the recent events I have been commenting about.

    The software still exists, unused at present. On the balance sheet, it personally cost me about $17,000 more than it brought in (when I factor in taxes, donating the money back and the wasted server).

    Phone systems. Yes, we talked about a new phone system that would save the party lots of money. I recommended it. It was approved as part of the budget and was installed in 2012.

    The phone system saves the party money — or it was the last I heard. I’m not on the board, so I don’t have access to the financial data.

    I did not sell a phone system to the party, nor did I ever have any intent of doing so. I don’t sell phone systems, and I didn’t get any commission or other compensation from the vendor that was selected. I have never had any financial connection with them of any form.

    I did assist, as a volunteer, in planning and determining the party’s needs for a phone system and other IT related purchases when I was on the LNC. I also did a number of other IT related tasks for the party when I was on the LNC, all as a volunteer. I fixed failed servers, helped with support issues on the web server, etc — AFTER my contract to supply software ended.

    When several of us were tasked with a project that required going to DC for a week, I did not turn in any travel expenses. Others did. When I spent three weeks in DC the first year the project was implemented, I did so at my own expense. Other vendors turn in expenses. I did not. I slept on someone’s couch for three weeks and paid for my own food and other expenses.

    I am not being hypocritical, if that’s what you were trying to imply. If you were simply asking an innocent question, then you’ve gotten what I hope is an acceptable reply. This was all documented more than five years ago when the project ended. Lots of crazy accusations were said and written about a project that could have grown the party and helped win elections.

    The system has been used by the party several times since the project was cancelled. No further fees have ever been charged for use of the system. Several attempts were made to bring it back, all of course no charge on my part.

    But you know politics: once you’ve got enough enemies, good luck getting anything accomplished!

  54. Mike Kane

    From what I’ve read here, the entire problem is that there was no written contract. Having worked in the past for a few LP groups and another non-profit, in addition to doing other consulting work, I will not work without a contract. Clear and comprehensive contracts usually avoid these types of disputes.

    Regarding fundraising/email testing etc. I’ve researched extensively into how the democrats used technology to win Obama the election in 2012 (and how he raised more money than the LP can dream of raising). I’ll include that information below, and have even considered starting a PAC to faciliate similar efforts, however I have chosen not to for the meantime at least. The fundamental issue with an undertaking like this is that it requires hiring some of the best and brightest tech minds in the industry, and hope to pay them below what their worth because they believe in the cause.

    Thanks for reading

    —————————————
    It’s ironic that the campaign apparatus with the least libertarian policy prescriptions ran the most libertarian political organization in history. Even the very structure of their organization was based on the principles of decentralization and empowering individuals. I think the Libertarian Party would be wise to learn from their successes.

    Here’s the video of Teddy Goff spilling the beans on how the dems won the election
    http://www.youtube.com/watch?v=Uk0quEECLQA – 386 views on youtube — how disappointing.

    http://www.cnn.com/2012/11/07/tech/web/obama-campaign-tech-team/index.html

    http://www.slate.com/articles/news_and_politics/politics/2012/11/jim_messina_offers_his_tips_on_how_barack_obama_s_campaign_team_beat_mitt.html

    Email Specific

    http://www.businessweek.com/articles/2012-11-29/the-science-behind-those-obama-campaign-e-mails

    http://blog.kissmetrics.com/email-marketing-lessons-obama/

    http://www.marketingsherpa.com/article/case-study/obama-email-campaign-testing#

    http://blog.optimizely.com/how-obama-raised-60-million-by-running-an-exp

    http://www.klaviyo.com/blog/2012/11/06/re-hey-an-analysis-obamaromney-emails/ – Interesting analysis about who the emails actually come from

    http://www.breakingcopy.com/obama-campaign-email-subject-lines/ – older article but still good

    http://swampland.time.com/2012/11/07/inside-the-secret-world-of-quants-and-data-crunchers-who-helped-obama-win/2/

    http://www.copyblogger.com/email-marketing-that-works-2/ interesting article, maybe can incorporate more emotional string pulling in emails.

    Metrics Specific
    http://slashdot.org/topic/bi/the-billion-dollar-startup-inside-obamas-campaign-tech/

  55. paulie

    Thanks Mike and Stewart for the informative comments, and Colombo for the good questions (even if they were leading ones).

  56. Columbo

    Stewart, don’t get me wrong when I say this. I am not mocking. A lot of people wrestle with finances. But a lot of people also wrestle with the idea that you had $17,000 you could lose on this project. You don’t have that kind of money.

    Theres one more thing here that doesn’t quite make sense that I am trying to figure out. It would not make sense for you to pay $8,000 out of your own pocket for a server that the party was supposed to pay for and then not even use it after you paid for it. I must presume you paid for it before the first trial that failed because why would you spend that money after they cancelled the project?

    And if the need for a fast server was all that was wrong with the system, and the contract for the server was signed, why did they pull the plug on the deal? It’s hard to believe they wouldn’t give you a chance to use the new server after they had invested several thousands of dollars in the idea. My guess is that the server question was not really why the project stopped.

    Like you, Michael Cloud also argues that his work raised more money for the party than he was paid.

  57. Columbo

    Stewart I think you dodged the question about the phone system. I didn’t say you were a vendor that sold a phone system to the LNC. But what I heard you were promising was that all the state partys would be connected into this phone system. It would save them a lot of money, route calls to there cell phones, all kinds of features. I asked a few people in state partys and they say that never happened. So just because a phone system was bought and installed in DC doesn’t mean the job was done. That’s nice that the DC office got some savings. I am all for that. But what about the rest of the deal?

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