Federal law enforcement agencies have launched a criminal investigation into the use of American Express cards issued by the Republican Party of Florida to elected officials and staff, according to sources familiar with the inquiry.
The U.S. Attorney's Office in Tallahassee, the FBI and the Internal Revenue Service are all involved in the inquiry, which grew out of the state investigation into former House Speaker Ray Sansom. He was indicted on criminal charges that he stashed $6 million in the state budget for an airplane hangar for a friend and campaign donor.
In the federal case, Sansom and others could be charged with making false statements on their tax returns and tax evasion stemming from hundreds of thousands dollars in charges on party credit cards.
A spokeswoman for the Republican Party of Florida, Katie Betta, said she could not confirm the investigation nor make any comments. Coming in a high-stakes election year, the investigation could expose the inner-workings of a party that has dominated state government and raked in millions of dollars from lobbyists and special interests.
Meanwhile, in a separate inquiry, the IRS is also looking at the tax records of at least three former party credit card holders — former Florida House Speaker Marco Rubio, ex-state party chairman Jim Greer and ex-party executive director Delmar Johnson — to determine whether they misused their party credit cards for personal expenses, according to a source familiar with the preliminary inquiry.
Political parties, which are tax exempt, are allowed to spend money only on political activities, such as fundraising, running campaigns and registering voters. While it's commonplace for party officials and politicians to wine and dine donors, the Florida party allowed credit card holders to rack up hundreds of thousands of dollars in charges with little oversight.
The IRS opened the so-called "primary'' investigation into Rubio, the leading Republican candidate for Florida's open U.S. Senate seat, and the two former state GOP officials to see if there's enough evidence to support a full-fledged criminal inquiry, according to a source familiar with the IRS examination.
Rubio campaign adviser Todd Harris said Tuesday that the former lawmaker from Miami has not been contacted by any federal investigators.
"There is absolutely nothing to this,'' he said. "Anyone who is looking into it or investigating will quickly come to the same conclusion.''
At this stage of the IRS investigation, agents are looking at federal tax records, state financial disclosure forms and other documents to see whether Rubio, Greer and Johnson may have personally benefited from using their GOP American Express cards without reporting or paying taxes on additional income.
"They would be interested in pursuing a case if the amount of money was big and it was being spent on people and things that were prohibited under the GOP's structure,'' said Jose I. Marrero, former special agent in charge of the IRS's South Florida office.
The party stopped issuing credit cards last year after Greer cut up his own American Express card at a party meeting to try to quash the uproar over spending.
Rubio billed the party for more than $100,000 during the two years he served as House speaker, according to credit card statements obtained by the St. Petersburg Times and Miami Herald. The charges included repairs to the family minivan, grocery bills, plane tickets for his wife and purchases from retailers ranging from a wine store near his home to Apple's online store. Rubio also charged the party for dozens of meals during the annual lawmaking session in Tallahassee, even though he received taxpayer subsidies for his meals.
Rubio said the billings all related to party business — the minivan, for example, was damaged by a valet at a political function — and that he repaid the party for about $16,000 in personal expenses.
Asked during his campaign bus tour last week if he needed to amend his tax returns to reflect any party money that covered his personal expenses, Rubio said, "We don't believe it's income. It's not. . . . Whatever the law is, we're going to comply, but I don't think it's income.''
Greer, who was forced to resign in January amid allegations that he misspent party money, said of the IRS inquiry, "I paid all my taxes and did everything my accountant told me to do.''
Johnson referred questions on Tuesday about the IRS inquiry to his attorney, Bob Leventhal, who could not be reached. His credit card statements, which were obtained by the Times/Herald, included chartered planes, lavish meals and golf outings.
Greer and Johnson are at the center of a Florida Department of Law Enforcement investigation into a secretly formed consulting business that reaped $200,000 from the party. Greer, in turn, has filed a lawsuit against the party that says it reneged on a $124,000 severance deal that also would have absolved him of any financial wrongdoing. Greer was replaced by state Sen. John Thrasher of St. Augustine in a special election. Thrasher signed the secret agreement with the chairman along with incoming Senate President Mike Haridopolos and House Speaker Dean Cannon.
Cannon charged about $200,000 in 2008 and 2009, of which he identified more than $3,000 in personal expenses. He reimbursed the party after his American Express card statements were disclosed in the press.
Haridopolos billed only $2,400 during the three months he had a party American Express — most of it on food for fundraising events in his hometown.
Rubio's struggling rival for the U.S. Senate, Gov. Charlie Crist, has seized on the former lawmaker's credit card spending to try to raise questions about his integrity.
Rubio acknowledged in February that he double-billed state taxpayers and the party for several plane flights from South Florida to Tallahassee. He said he would pay the party back about for eight flights totaling about $3,000, but the party said Tuesday it had not received a check.
Harris said the campaign has determined that only six were double-billed and is waiting for the party to verify the exact amount.
Rubio's tax attorney, Steve Wasserstein, said Tuesday that the double-billing was an "accounting mistake'' that does not require an amended filing and will be easily rectified when Rubio repays the party.
Times political editor Adam C. Smith contributed to this report.