O'Donnell: Spending accusations are 'thug' tactics

[December 30, 2010]  BALTIMORE (AP) -- Failed U.S. Senate candidate Christine O'Donnell said Thursday that accusations she misspent campaign funds are politically motivated and stoked by disgruntled former campaign workers, defending herself a day after the disclosure of a criminal investigation into her spending.

The Delaware Republican appeared on several network morning shows after it was revealed that federal authorities have launched the probe to determine whether she broke the law by using campaign money to pay personal expenses.

"There's been no impermissible use of campaign funds whatsover," O'Donnell told ABC's "Good Morning America."

O'Donnell, the tea party favorite who scored a surprise primary victory before losing in the general election, suggested the accusations are driven by her political opponents on the right and left, including Vice President Joe Biden.

"You have to look at this whole thug-politic tactic for what it is," she said Thursday.

She said that she found it suspicious that neither she, her campaign staff nor her lawyer have been informed of a federal investigation.

A person familiar with the investigation told The Associated Press on Wednesday that it had been launched, speaking on condition of anonymity to protect the identity of a client who has been questioned as part of the probe. The case, which has been assigned to two federal prosecutors and two FBI agents in Delaware, has not been brought before a grand jury.

O'Donnell, who set a state record by raising more than $7.3 million in a tea party-fueled campaign this year, has been dogged by questions about her personal and campaign finances.

At least two former campaign workers have alleged that O'Donnell routinely used political contributions to pay personal expenses including her rent as she ran for the Senate three consecutive times, starting in 2006. She acknowledged in a newspaper interview in March that she paid part of her rent with campaign money, arguing that her house doubled as a campaign headquarters.

On Thursday, O'Donnell told NBC's "Today Show" that she paid the campaign to use the townhouse as her legal residence because her home was vandalized.

O'Donnell said Thursday that people making the spending allegations include a fired former staff member and a former volunteer, both of whom she described as disgruntled. She says many other workers who spent longer with her campaigns have defended her.

The U.S. Attorney's office in Delaware has confirmed it is reviewing a complaint about O'Donnell's campaign spending made this year by a nonpartisan watchdog group, Citizens for Responsibility and Ethics in Washington. But officials in the office and the FBI declined to say whether a criminal investigation was under way.

In a statement Wednesday, O'Donnell called the allegations politically motivated and singled out Biden, who represented Delaware in the Senate for decades.

"Given that the king of the Delaware political establishment just so happens to be the vice president of the most liberal presidential administration in U.S. history, it is no surprise that misuse and abuse of the FBI would not be off the table," she said in the statement.

CREW alleged in a complaint last September that O'Donnell improperly used more than $20,000 in campaign funds to pay her rent and other personal expenses. The group also asked Delaware's federal prosecutor to investigate.

Federal law prohibits candidates from spending campaign money for personal benefit. FEC rules state that this prohibition applies to the use of campaign money for a candidate's mortgage or rent "even if part of the residence is being used by the campaign," although O'Donnell's campaign maintained that it was told otherwise by someone at the agency.

O'Donnell drew national attention in September when she upset U.S. Rep. Mike Castle for the GOP Senate nomination. She was handily defeated in November by Democrat Chris Coons following a campaign that focused largely on past controversial statements, including that she'd "dabbled into witchcraft" when she was young.

One former O'Donnell staffer, Kristin Murray, recorded an automated phone call for the Delaware Republican Party just before the primary, accusing O'Donnell of "living on campaign donations -- using them for rent and personal expenses, while leaving her workers unpaid and piling up thousands in debt."

O'Donnell told NBC that Murray was fired from her 2008 campaign after less than two weeks because of incompetency.

Another former aide, David Keegan, said he became concerned about O'Donnell's 2008 campaign finances as she fell behind on bills and had no apparent source of income besides political contributions. He submitted an affidavit to CREW alleging that she used campaign money to cover meals, gas, a bowling outing, and rent to a landlord, Brent Vasher.

Vasher, a nephew of Keegan's and a one-time boyfriend of O'Donnell, declined comment when asked by The AP if he had been contacted by authorities. Vasher bought O'Donnell's house in 2008 after she was served with a foreclosure notice, then charged her rent to stay there, according to CREW's complaint.

In a message sent last week to The AP, Keegan said he had not been questioned as part of a criminal investigation, and that he considers himself only a "catalyst" in a case in which several people must be questioned to scrutinize O'Donnell's accounting practices and alleged misuse of campaign funds.

After losing two treasurers in 2009, O'Donnell named herself campaign treasurer until this past summer. Another short-term treasurer took over in August and resigned less than two months later, at which point campaign manager Matt Moran added the treasurer's role to his responsibilities.

Democrat Charles Oberly III, the U.S. attorney for Delaware, and his predecessor, David Weiss, did not immediately return messages Wednesday seeking comment. Oberly was sworn in Tuesday as Weiss' successor.

O'Donnell, who announced just after Election Day that she had signed a book deal, hasn't held a full-time job in years and has struggled to explain how she makes a living.

[Associated Press; By BEN EVANS]

Associated Press writers Barakat in McLean, Va., Ben Nuckols in Baltimore and Randall Chase in Dover, Del., contributed to this story.

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