Reference: https://le.utah.gov/xcode/Title20A/Chapter11/20A-11-S201.html
The Office of the Utah Lieutenant Governor allows a candidate to connect a campaign account to Venmo, a mobile payment service and use that as an intermediary system to send and receive payments. I am asking the Office of the Utah Lieutenant Governor to provide an explicit statement that confirms funds can be co-mingled in mobile payment service accounts that have been set up with access to both personal and campaign accounts, and/or publish this to the disclosures site FAQ at https://disclosures.utah.gov/Help/Faqs.
The Problem
The Venmo app has a feature that allows an account to connect more than one backend bank to a single account. When money is received, it goes into the Venmo balance. When money is sent, you can choose whether to use Venmo balance funds, or money from one of the registered bank accounts. You can also transfer money in your Venmo balance to one of the registered bank accounts. It is for all intents and purposes a financial account that co-mingles funds.
What’s bothering me about this is that it appears the Office of the Utah Lieutenant Governor will allow funds to be co-mingled in a mobile payment service account. The question becomes whether the provider of a mobile payment service account (i.e. Venmo) is considered a “financial institution”. I would argue that they are. Venmo offers direct deposit, debit and credit cards. Setting up multiple transfer accounts with Venmo is similar to how a standard bank account works. A bank allows to receive and make payments, as well as transfer to third parties. Venmo is for all intents and purposes a financial institution.
Further, what is the audit capacity for forensic research of these types of payments? I’m concerned that this is breaching the “trust but verify” capability of their office.
Specifically:
- How do they identify that the amount received in a Venmo transaction is the same amount that is deposited into a campaign account?
- How do they identify that the timeliness of the transaction is reported to avoid disclosure reporting requirements (ex: is the contribution received when the money is transferred in Venmo, or when the balance is transferred to an account? Is the contribution ever reported if it never touches the actual campaign account? )
- How is money tracked if it is in a Venmo balance, never transferred to the campaign account, then used to pay for something else?
- How do they track payments or money transfers between two candidates that both use a mobile payment service like Venmo?
- What is an intermediary, if that person is allowed to receive funds and forward them to another party, and that transaction is not reported?
- Are they able to request account audits from candidates for mobile payment services?
- Are there specific mobile payment services that are allowed, or disallowed? Not all mobile payment services allow for a single account to create backend connections to multiple bank accounts.
My concern is that what’s in place is an honor system that can easily be disregarded, and the lack of public transparency is of significant concern. I contend that it is also a violation of Utah Code 20A-11-S201.
Spot the Difference
Situation One: A candidate opens a bank account, and begins to conduct transactions through it. The transactions include personal deposits and expenditures, as well as processing of campaign-related donations, expenses and transfers of money to other candidates. The candidate connects a separate personal bank account and a dedicated campaign account to this bank account so that they can transfer funds to and from the general account to the personal and campaign accounts. This is a campaign violation for co-mingled accounts.
Situation Two: A candidate opens a mobile payment account, and begins to conduct transactions through it. The transactions include personal deposits and expenditures, as well as processing of campaign-related donations, expenses and transfers of money to other candidates. The candidate connects a separate personal bank account and a dedicated campaign account to this mobile payment account so that they can transfer funds to and from the mobile payment account to the personal and campaign accounts. This is (apparently) NOT a campaign violation for co-mingled accounts.
My concern is that what’s in place is lazy. It is dependent on an honor system that can easily be disregarded, and the lack of public transparency is of significant concern. If a candidate wants to play fast and loose with both campaign contributions and campaign payments, there is no verifiable means of holding that candidate accountable.
A Gold Standard
- A campaign account is set up using personal ID, a signed candidacy declaration from the clerk’s office, and a Section 527 – Political organization Federal EIN for the campaign.
- Cash and checks are deposited and processed through the account.
- Online payment services have a singular relationship to the campaign account, and can electronically deposit funds to the account (ex: ActBlue online donation form for political candidates)
- Payments from the account should be in the form of debit card, online debit using the bank routing and account number, check or certified check drawn from the account.
- A cash withdrawal from a campaign account is typically discouraged, but can be done with a receipt to verify the expense.
The Case Applied
From disclosure@utah.gov, sent May 9, 2024
“Potential co-mingling of funds:
A Venmo account has the capacity to house multiple bank accounts. With this knowledge, and information provided by Rep. Teuscher regarding his specific Venmo account, we find that funds have not been co-mingled. As Rep. Teuscher has separate bank accounts within his one Venmo account, there has been no violation of 20A-11-201.“
Jordan Teuscher (Utah Representative for House District 44) uses a personal Venmo account to receive campaign contributions, and to make campaign expenditures. The Venmo account activity is not limited to campaign related activity. The majority of transactions on his Venmo account @jordanteuscher are clearly personal in nature, which indicates this account is not (or should not be) tied to his separate campaign bank account. Teuscher appears to be co-mingling funds through his Venmo account in violation of Utah law.
Teuscher either knew or should have known that it is impermissible for a statewide candidate to co-mingle funds. Teuscher – who serves as the chairman of the House Committee on Ethics – should be versed in these regulations. It is troubling that Teuscher is looking to further weaken Utah campaign finance reporting laws with the introduction of HB160 in 2024.
Multiple campaign violations appear to occur in 2020, 2021, 2022 and 2023.
Here is the proof:
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