Denninger Hits Johnson on Campaign Debt

The latest video from Karl Denninger of market-ticker.org, whose commentary figures prominently in Bill Still‘s campaign for the Libertarian Party’s 2012 presidential nomination, goes after former New Mexico governor Gary Johnson (also seeking the LP’s nomination) on his campaign’s indebtedness and litigation status:

[hat tip -- George Phillies]

68 thoughts on “Denninger Hits Johnson on Campaign Debt

  1. Robert Capozzi

    LOL! Advocating a balanced government budget has nothing to do with a private (non-profit) organization carrying accounts payable. If it does, I’d like to hear the case.

    Pears and tangerines…

  2. Thomas L. Knapp Post author

    RC@2,

    You might want to read the complaint before characterizing this as “carrying accounts payable.”

    The complaint alleges breach of contract, unjust enrichment, fraud and breach of fiduciary duty, and makes factual claims to establish the veracity of those allegations.

    Oh, it also seeks a constructive trust of all the campaign’s money and assets pursuant to recovering the requested relief. Not a good position for a campaign to be in oh, 60-90 days from now.

  3. Robert Capozzi

    3 tk, thanks. Lawsuits will say what they say. Whether they correct is another matter. It sounds like people associated with the GJ campaign may have represented something to Bydlak and that may not have been correct. Whether those representations amounted to a contract between the Bydlak and the campaign, I dunno. It sounds like Bydlak may not have gotten the representation in writing.

    Lawyers (including a “real lawyer,” a term that also makes me chuckle with its sophomoric tone) say a lot of things to zealously represent their clients. Myself, I generally think that patience is required in such matters before forming an opinion about the facts. For ex., if I did see “Limo services” in an FEC filing, it might cause me to ask a question, but not to flip out, making wild accusations publicly.

    Regardless, it still sounds like aging accounts payable to me, not “debt.”

    More to the point, Denninger’s equilibration between GJ’s advocacy of a federal balanced budget and GJ’s campaign is ludicrous on its face.

    From a cash flow/piggy-bank perspective, many entities run cash flow deficits. Have you heard of Black Friday? Many/most retailers are cash flow negative until late November.

    Denninger seems to be claiming “hypocrisy” where there is none. Surely he knows that an enterprise’s cash flows wax and wane, so is he himself being hypocritical? Is he ignorant? Is he attempting to manipulate viewers? I dunno. I’m sure I find his argument absurd, though.

  4. Root's Teeth Are Awesome

    @4 as long as we also agree that an accusation is different then a conviction.

    That statement is too broad. We can agree there’s a difference, yet disagree on the nature of that difference.

    Some may believe that this accusation is no big deal.

    Others may believe that this accusation, while less bad than a conviction, is still pretty bad.

    It all comes down to, what are the circumstances of this accusation. Not, “is it better than a conviction.”

  5. Thomas L. Knapp Post author

    RC@5,

    “it still sounds like aging accounts payable to me, not ‘debt.'”

    In what universe are “accounts payable” — of any age — not “debt?”

    Definition of ‘Accounts Payable — AP’ An accounting entry that represents an entity’s obligation to pay off a short-term debt to its creditors.

    The questions raised by the suit are:

    1) Whether or not the debt exists (the campaign’s FEC reports seem to answer that question affirmatively);

    2) Whether the debt has been paid in a timely manner, or is in delinquency or default (the suit alleges the latter);

    3) If the latter, whether additional factors such as fraud are involved (the suit claims so).

  6. Wes Wagner

    I suspect that there will be plenty of apologists who join in on the discussion of this matter saying “well all campaigns operate this way.”

    We will learn much about those individuals’ moral character in that they fall victim to belief that an act of fraud or deception is somehow made justified by its popularity.

  7. Root's Teeth Are Awesome

    Isn’t it a libertarian principle that one should want to pay one’s debts?

    Yet I expect some Johnson supporters will try to hide behind legal technicalities as to whether Johnson’s Libertarian campaign is the same as his Republican campaign, whether they are the same corporate entity, as per this or that law, or Robert’s Rules, or whatever.

    Capozzi: I generally think that patience is required in such matters before forming an opinion about the facts.

    Another vapid statement, because it fails to define how much patience. A week? A month? Ten years?

    Delegates will need to form an opinion by convention time, regardless of how much or little data is available.

  8. Robert Capozzi

    10 teeth, the timeframe depends. Generally, I like to at least hear both sides. Whether this needs to be sorted out before convention…maybe. This doesn’t seem like a major issue to me, but others might.

  9. Wes Wagner

    BH @11

    We act in the bright light of day and there is no fraud or deception here. Others though… well they conceal their actions and you have fallen into supporting people you don’t entirely understand because you are too caught up in the games of your own.

  10. just asking

    @5 — re: “It sounds like Bydlak may not have gotten the representation in writing.”

    What is your source for this?

    Moreover, I thought we didn’t need written contracts or treaties?

    Bydlak had a “special relationship” and a “constructive alliance” with the Johnson campaign. We have learned from the Johnson campaign that these kind of relationships are “very important” even without a formal contract.

    Or maybe some “alliances” are more special than others?

  11. Thomas L. Knapp Post author

    RC@13,

    “This doesn’t seem like a major issue to me, but others might.”

    I suspect it will be. Or at least, going by past logic, it should be.

    In past LP presidential cycles, some candidates have promoted themselves with their fundraising prowess, while others have been decried for lack of same,

    Some internal LP critics were especially harsh on 2004 convention delegates for nominating a candidate who arrived at the convention nearly broke.

    Presumably those same critics would take a dim view of a candidate who arrived at the convention $200,000 in the hole.

  12. Brian Holtz

    @14 A misrepresentation of one’s authority to do something can happen in the bright light of day and yet still be fraudulent. However, I’m not sure if the bright light of day has shined on the communication to the OR SoS that represented novel LPOR bylaws as legitimately adopted. I can’t find that communication in the materials I’ve seen on the case.

    you have fallen into supporting people you don’t entirely understand

    In this case I don’t support “people”, I support the rules. I’ve tried to avoid learning about the backgrounds of the people in the case, but I haven’t been able to avoid noticing that one side thinks that the backgrounds of the other side is extremely important. That speaks volumes.

  13. Wes Wagner

    BH @20,

    A key element of fraud is the whole deception part… something the surreptitious activities of certain parties and certain LNC operatives seem to have in spades.

    I have never misrepresented what was done.

  14. Brian Holtz

    I have never misrepresented what was done.

    Not even to the OR SoS? Has the bright light of day has shined on the communication to the OR SoS that represented novel LPOR bylaws as legitimately adopted?

    the surreptitious activities of certain parties and certain LNC operatives

    The Bad Guys (TM) were against you, so we’re invited to conclude that what you did must have been justified. Way to miss my “speaks volumes” point above.

  15. Wes Wagner

    BH @22

    The SoS was advised precisely as to what activities were taken and by what parties with regards to our filing at the time it was made in detail.

  16. Brian Holtz

    “In detail”? Did the SoS get the detail that LPOR Bylaws say they can only be modified in convention, but that your novel Bylaws were adopted by five people in Elmer’s restaurant?

    Will “write the SoS” be your stock answer to any NatCon delegate asking you as a Chair candidate what it was you communicated to the OR SoS when you represented to them that the LPOR Bylaws had been legitimately replaced?

  17. Robert Capozzi

    15 just, we don’t know who wrote/said what to whom, and whether the representation was authorized or not.

    This vendor may or may not have a valid grievance with someone, perhaps with the campaign’s treasury.

  18. Brian Holtz

    I suspect they will be more interested in the activities that led up to it

    Ah, right, the Bad Guys (TM) again.

    If we follow the rules, the Bad Guys (TM) will win.

    “Remember 9/11″. It worked for W in 2004, so maybe it’ll work for WW in 2012.

  19. ATBAFT

    What will be important is “does GJ owe money to Mr. Bydlak (and other vendors)?” Call it a debt or accounts payable or an i.o.u. or whatever, if it is legitimate and GJ tries to walk away from it, that will tell alot about his character. And if it is legit, and GJ wants to pay, then payments will come out of what he raises as the LP candidate (if not raised sooner). This is a burden that wasn’t expected but may be worth the price. [Maybe better spent than $50,000 for a mayor's race.]

  20. Eric Sundwall

    Isn’t the carrot of the Johnson effort the ninety million smackers from our fellow citizens once we get 5% in the general?

    That promise or its sudden arrival is a big motivator here folks. That kinda money instantly transforms the LP into a bigger, biting, back stabbing cabal of hopers claiming the new shining path . . . mark these words.

  21. just asking

    @26 — The filings in the case are on PACER ; maybe you should look them up before claiming there was no written contract.

  22. Robert Capozzi

    28 A, yes, that’s a fair and reasonable characterization. I am not at all surprised that the GJ campaign has some A/P, but I’m a bit surprised by the magnitude of it.

    Given that GJ is a bigger brand today than he’d have been if he never was in the GOP prez field, it’s probably worth $200K, of which only $53K is subject of a civil suit.

    I’d note that at the moment, we may be witnessing the GOP committing hari kari, particularly if Santorum gets the nod. That increases the chances that AE will be serious, and opens up the possibility that the LP could get some serious play IF we nominate someone serious, like GJ (or RP).

    I don’t see an accounting squabble (which we don’t have anything resembling all the facts) as being worthy of the LP self-immolating.

  23. Robert Capozzi

    31 just: maybe you should look them up before claiming there was no written contract.

    me: That’s funny. I’ve made no such claim.

    I said: “It sounds like Bydlak may not have gotten the representation in writing.”

    That was based on my reading of the article that TK linked to. I have NO idea what “Pacer” is.

    Based on my very clear sentence, featuring the words “may not have,” I have to conclude that you are either confused or purposely distorting my words.

    (There’s nothing wrong with being confused in my book. Everyone makes mistakes. Purposeful distortion, OTOH, pushes us all away from truth, which I happen to believe sets us free. You?)

  24. Thomas L. Knapp Post author

    ATBAFT@28,

    “if it is legit, and GJ wants to pay, then payments will come out of what he raises as the LP candidate”

    Personal wealth is sometimes misunderstood — a “millionaire” may have very little liquidity because $500k of his million is tied up in his business, $300k in his house, and $200k in his Roth IRA — but with an alleged net worth of $3-$10 million, it’s possible that Johnson might be able to loan his campaign the money to pay off its debt, then forgive that debt if the campaign doesn’t end in the black enough to pay him back.

  25. Steven Berson

    Eric –
    I’d say the carrot for a Johnson nomination for someone like me is way less the potential for matching funds (for which I think a very important discussion is whether the LP should reject these out of principle or accept in terms of pragmatism – I’m divided on this myself) – and way more in terms of the fact that GJ has been able to garner a substantially greater amount in terms of national media attention than other LP candidate – even before being nominated (and this is not conjecture – no other LP candidate is making appearances on Fox, MSNBC, CNN, etc. and getting the same amount of web or print journalism either) – while still espousing (minus perhaps FairTax advocacy and minor deviations from non-interventionist foreign policy) that I’d say are still true to the LP platform. The fact is there is a small chance he could poll into the 15% required to get into the national debates. No other LP candidate will be able to get into that place as far as I can tell. The question of course is whether LP delegates wish to have someone on the top of the ballot with some deviations from strict adherence to the LP platform in order to get there. Guess we’ll find out in May.

  26. Robert Capozzi

    33 gp: 5% is another pie in the sky promise.

    me: Missed where a “promise” was made. Source?

  27. Steven Berson

    btw – I’d say the GJ campaign debt is much more likely to be around less than $160,000 now, based on over $55000 that have been given since the 12/31/2011 filing date – minus continuing expenses.

  28. Robert Capozzi

    36 sb: …with some deviations from strict adherence to the LP platform…

    me: Guess that depends on what one means by “strict.” Are GJ’s position in actuality in “violation” of the Platform?

  29. Hardy

    @12 so people can’t evolve their positions toward a more libertarian position? If not then we might as well close down the party because very few people start out pure.

  30. George Phillies

    @38

    It somehow seems unlikely that his continuing expenses have stopped. On the other hand, his Republican donations are likely in the process of mostly stopping. We will know soon enough.

  31. Eric Sundwall

    At the debate in Manhattan GJ used the figure of 90 million and five percent. It wasn’t my calculation or understanding of an accurate figure.

    The point simply is, that is what GJ himself is currently dangling in front of membership as red meat.

  32. Stephen VanDyke

    Gary Johnson’s balloon isn’t shot down just yet, but it’s quickly deflating.

    If he’s willing to put his own skin in the game (his net worth is commendable), he’ll be able to overcome this legal snafu and actually run a proper campaign. But until he gets his campaign staff and accounting in order it’s going to continue to be a lackluster effort.

    At least his website is pretty.

  33. Robert Capozzi

    43 gp, yes. Can you imagine supporting a L prez candidate who is a global warming denier? I wonder whether the entire field are deniers, as that tends to be the position Ls take.

  34. Wes Wagner

    It is interesting that the Johnson Campaign has retained Mr Burke as his campaign director for Oregon.

    Now I know Burke will go anyplace where he think he can squeeze out a buck or an in since he has burnt practically every bridge in Oregon, but Johnson’s campaign is really getting off to a rocky start.

  35. Bill Woolsey

    Bill Still’s views on money and banking are absurd.

    If Denninger supports Still, it is hard to take anything he says seriously regarding the ethics of “debt.”

    Presumably, there is a conflict between Johnson and the former fundraisers. The most likely conflict is that Johnson claims that they didn’t provide the services promised and so aren’t due payment. Their position is that they did provide the services, and so are due payment.

  36. Thomas L. Knapp

    Bill@48,

    “The most likely conflict is that Johnson claims that they didn’t provide the services promised and so aren’t due payment. Their position is that they did provide the services, and so are due payment.”

    If that was the case, Johnson wouldn’t list the amounts owed as campaign debt on his reports, any more than I would list some streetcorner bum’s demand for whiskey money on my P&L sheet as a payable.

    The issue isn’t that he doesn’t owe the money. He admits that he does. The issue is that he hasn’t paid the money.

  37. Wes Wagner

    I think many people also don’t quite logically put together that you generally don’t go through the expense of suing someone for money unless you reasonably expect that they can’t or won’t pay you and you want to cur the expense to be first at the trough to get paid.

    Lawsuits cost money and you don’t spend that unless you feel you have to.

    This person at least believed they were going to get ripped off (whether true or not).

  38. Michael H. Wilson

    re 47. So it seem the Johnson campaign has hired someone who by his own admission doesn’t do what he claims to do. All talk and no action.

    Who in the campaign made that decision to just give away money?

  39. paulie

    The question of course is whether LP delegates wish to have someone on the top of the ballot with some deviations from strict adherence to the LP platform in order to get there. Guess we’ll find out in May.

    See 2008, I think that question has been answered.

  40. paulie

    so people can’t evolve their positions toward a more libertarian position?

    Of course they can. I’d be interested to hear Gov. Johnson explain on which issues his positions have changed, when, and why.

    Note that @12 contains several different internal pages, which you can look at by browsing the menu on the left hand side of the page. They make a variety of different allegations, not all of which have to do with evolving or conceivably evolving positions.

  41. paulie

    If Denninger supports Still, it is hard to take anything he says seriously regarding the ethics of “debt.”

    I don’t see how who Denninger supports has anything to do with whether campaign debt after a certain reasonable length of time for payment is a breach of ethics (or the law, for that matter).

    Presumably, there is a conflict between Johnson and the former fundraisers. The most likely conflict is that Johnson claims that they didn’t provide the services promised and so aren’t due payment. Their position is that they did provide the services, and so are due payment.

    Is this pure speculation? As far as I know Johnson and his campaign have not disputed that the money is owed.

  42. paulie

    Lawsuits cost money and you don’t spend that unless you feel you have to.

    Unless it’s a contingency fee, which it should be if the lawyer thinks it’s a good case.

  43. Wes Wagner

    P @56

    And thus you lose 33-40% of your collections, which you would not sacrifice unless you thought the other side would not pay you absent a court process.

  44. paulie

    Depends on how much you value money up front versus money down the road, or whether you even have the money up front, and how much risk you want to take.

  45. John Balzer

    It should be remarkable when candidates like Bill Still that are lacking substance resort to citing phoney charge civil litigation. It is of course standard practice for Karl “low-blow” Denninger who is showing his desperation after having been creamed by Gary Johnson in Florida.

  46. Henry Wilkerson

    If you watch the Florida debate, you will see Bill Still performing 3 Stooges impersonations. No, literally. He did them on stage. Is this the guy you want for president? Denninger should pack up and go home before he maligns someone like Gary Johnson who actually has a solid record and more integrity in his pinky than Denninger has in his entire being.

  47. paulie

    It should be remarkable when candidates like Bill Still that are lacking substance resort to citing phoney charge civil litigation.

    How do you know it’s a phony charge, and has Still made a charge, or has someone who happens to be supporting him merely comment on it? There’s a difference.

  48. paulie

    @ Balzer, Wilkerson, and anyone else at your IP address who agrees with you:

    Denninger is commenting on Johnson’s campaign debt. The issue is the debt, not who happens to notice it, which is by no means limited to Denninger.

    In case you are wondering, I haven’t ruled out supporting Johnson, although I have in fact ruled out supporting Bill Still.

  49. George Phillies

    @59

    Denninger is a late-comer to this issue, which has been covered elsewhere a bit earlier. Also, the lawsuit is available through PACER, or or so I read, which means that it is very definitely not phony.

  50. Steve M

    I would presume its not phoney but the cost of executing it is likely to be $100K. So who is funding it and why? Follow the money….

  51. Thomas L. Knapp

    Steve M @ 64,

    “the cost of executing it is likely to be $100K. So who is funding it and why?”

    If it’s successful, the Johnson campaign (and its donors) will be funding it. The suit isn’t just seeking what Johnson and his campaign owes. The relief request includes “compensatory damages, restitution damages, quantum meruit damages …. punitive damages …. reasonable attorney’s fees.”

    The place to look for ulterior motives is not the suit’s likely costs. It’s in the one other bit of relief requested:

    “a constructive trust on all real and personal property purchased by the Defendants with money derived from the Campaign funds.”

    That goes beyond a mere judgment that might tap what money the campaign has. It would effectively shut down the campaign by making it Bydlak’s property.

  52. Nicholas Sarwark

    @65: Just remember, what you ask for in an initial complaint is not what you get unless (a) the other side doesn’t dispute any of the claims and (b) the Judge agrees that they all have merit. An initial complaint in a civil suit is more like an opening bid than a recitation of what the other side will end up paying.

  53. Thomas L. Knapp

    NS@66,

    Yeah, I know — I was just trying to be helpful to Steve M in constructing a “this isn’t about money, it’s an attempt to torpedo Johnson’s campaign” theory.

  54. Chaz

    The difference between is Bydlak claims he is owed over $100K and GJ’s campaign according to FEC filings only reports it as ~$50K. Currently they are looking to qualify for matching primary funds and if successful will likely pay the ~$50K that is the A/P as well as most if not all other A/P (or “debt” the terminology is just a who vs what argument “A/P” is whom and “debt” is what).

    There may/may not have been a contract but it looks to me like the dispute is about what portion of fundraising can be attributed or not attributed to Bydlak. It also seems like Bydlak is pissed that other A/P got paid before him which is why he names the other parties in the suit. What the reality is I don’t know and it can not be known from this video or from the hammer article on it.

    Does anyone have a PACER link to this in order to track the events of the case?

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