Midterms

Kansas Republican and his dad spent $1.2M on his race — mostly against GOP rivals

Who is Kansas GOP nominee Steve Watkins?

Congressional candidate Steve Watkins inflated his role as a defense contractor in the Middle East by telling voters he built a company from scratch. He didn’t.
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Congressional candidate Steve Watkins inflated his role as a defense contractor in the Middle East by telling voters he built a company from scratch. He didn’t.

Kansas Republican Steve Watkins and his father have given a combined $1.24 million to boost the younger Watkins’ bid for an open seat in the U.S House of Representatives — an eye-popping sum for a congressional race in Kansas.

The vast majority of those funds were spent to defeat the younger Watkins’ fellow Republicans in a bitterly fought seven-way primary race in August, rather than in the general election contest against his Democratic rival, Paul Davis.

Watkins Sr., a Topeka physician, poured more than $765,000 into a super political action committee to benefit his son. Super PACs can raise unlimited funds but can’t coordinate directly with candidates.

“This is unprecedented,” said Bob Beatty, a political science professor at Washburn University in Topeka. “I can’t speak of course for other states, but in the state of Kansas we’ve never had a parent do this for any candidate in any race to this extent.”

The younger Watkins also sank nearly a half million dollars of his own money — a substantial amount of his declared wealth — into his campaign as a series of interest-free loans in September, December and June.

The trio of loans he made to his campaign started small, with $100 in September 2017, and the amounts kept growing.

In December 2017, Watkins loaned his campaign $175,000. Then in June he loaned another $300,000.

The total of $475,100 in self-funding represents a large chunk of Watkins’ net worth, which is somewhere between $440,053 and $2.7 million, according to the personal financial disclosure forms all federal candidates must file when they run for office. Such forms only give a broad range of income.

Pat Leopold, a Watkins campaign consultant, said the candidate saved money from a good paying job as a defense contractor in the Middle East. Watkins used cash he’d set aside in a bank account to make the December loan to his campaign, Leopold said, and had to liquidate some assets to loan his campaign the additional June money. The campaign didn’t identify the specific assets.

“He’s investing,” Leopold said. “He’s putting skin in the game because this is important for him and he knows if he wins he knows what his salary will be in Congress ... and he knows if he loses he’ll be just fine.”

The annual salary for most members of Congress is $174,000, according to the Congressional Research Service.

Based on his financial disclosure, Watkins had annual investment income between $40,620 and $125,200 and a total of $73,035 in paid work income between January 2017 and April 2018.

His disclosure statement shows Watkins’ most valuable assets are two rental properties in Alaska, which he still owns, and an unconventional investment in a New Orleans bed and breakfast, a property that Watkins and his business partners are leasing but do not own outright.

The nature of his stake in the lodging business is unclear.

The Watkins campaign said his investment in Rathbone Mansions, a New Orleans property, was a passive real estate investment. Under disclosure rules, he reported an asset jointly owned and valued between $500,001 and $1 million. In conversations with The Star campaign officials said his initial investment was $100,000.

His father also is separately invested in the same hotel, Watkins’ campaign said.

Kansans Can Do Anything

The elder Watkins is the primary donor to Kansans Can Do Anything PAC. He was responsible for all but $10,000 of the PAC’s $776,019 in contributions since its creation in April.

The PAC spent virtually all of those funds before Kansas’ August primary, mostly on ad buys and media expenses. It also spent more than $35,800 worth of opposition research and mailers to oppose Republican Caryn Tyson, a GOP state senator from Parker, Kansas. Tyson had come closest to Watkins in most polls of the district. She lost to him by 3 percentage points.

“The super PAC just had to get him through that primary,” Beatty said. Watkins won the primary with a plurality of 26 percent.

Watkins’ campaign has raised $282,342 and spent about $255,900 in the period between July 19 — two and a half weeks before the primary — and Sept. 30, the most recent filing deadline for federal candidates.

Since the primary, Watkins’ father’s super PAC has spent about $1,000 on the general election against Watkins’ Democratic opponent Davis, compared to more than $760,000 in the GOP primary, the latest records from the Federal Election Commission show.

Davis, a former minority leader in the Kansas House, raised $1.3 million since July 19. He’s spent $1.03 million on the general election race as of Sept. 30. During the primary, he contributed $8,355 to his own campaign in the form of an in-kind donation. The amount represents the value of Davis’ campaign email list from his unsuccessful 2014 run for governor, his campaign said.

Spending by both Watkins’ and Davis’ campaigns has been dwarfed by the $7.1 million outside groups and party committees have thrown into the race, a close contest that could help determine which party controls the U.S. House of Representatives.

Legal but unusual

“This is unfortunate but legal,” Sheila Krumholz, executive director of the Center for Responsive Politics, a nonpartisan campaign finance transparency advocate that runs the website opensecrets.org, said of the funding for Watkins’ congressional bid.

Pointing to the super PAC largely funded by the elder Watkins, Krumholz said it strained credulity that the father’s campaign vehicle had no coordination with his son’s campaign.

“It is Exhibit A that Super PACs are not all that distinct from the candidate and the campaign effort,” she said, adding that “it becomes almost an extra account, almost at the disposal of the candidate, which makes a mockery of campaign donations.”

Campaign spending data available on opensecrets.org show that traditional PACs have given handsomely to Watkins’ Democratic opponent, Davis, with labor donations exceeding $150,000 in the 2018 election cycle through early October. Davis also has received contributions from PACs representing Planned Parenthood, firefighters, pharmacists and from prominent House Democrats.

Watkins also has raked in contributions from PACs and House Republicans, including the PAC for Independent Insurance Agents & Brokers, John Deere’s PAC, and the political arm of the National Federation of Independent Business, a GOP-leaning business group that played a key role in the legal fight over Obamacare.

Kansas Rep. Kevin Yoder — a Republican embroiled in his own tight race in a neighboring congressional district — donated $5,000 to Watkins from his leadership PAC.

That candidate Watkins lent his campaign funds from his personal wealth is not unusual.

But, Krumholz said, “it’s highly unusual for the candidate to loan themselves nearly all their money.”

Essentially, Watkins has bet much of his declared personal wealth on winning in November. If he doesn’t win, and can’t repay himself, then “that becomes a pretty big drag on him,” said Krumholz.

An unconventional investment

One unusual feature in Watkins’ financial disclosure is in his unconventional investment in the New Orleans bed-and-breakfast.

Records at the Orleans Parish Assessor’s Office show that the bed and breakfast property belongs to Rahim E. Ebrahimpour, who owns it through Rathbone Inc. In an interview, he said he’d never heard of Watkins and that he had offered the property under lease to Belle Mansions LLC.

The Star has learned that the lease covered a period of three years. At the end of the period Belle Mansions can purchase it for a price agreed upon at the start of the lease, but none of the rent money goes toward the purchase.

People familiar with the transaction, who requested anonymity in order to speak freely, said they found it odd that so much money was being spent in advance of taking ownership of the property.

Two former workers at Rathbone Mansions described a young couple that has been aggressively refurbishing the leased property, even though they do not own it. The company leasing the property is Belle Mansions LLC, a Delaware company that lists Christina DiPierro and Kevin Fagan as the directors of the company. Neither returned requests for comment.

One former employee, Jessica Scarabin, said the couple had told her that Watkins and his father were owners or investors in the property, and she saw them visit it.

The Watkins campaign said Fagan is a college friend of the younger Watkins. but did not characterize the investment, whether it was an ownership stake or a loan to a friend. Nor did officials provide any terms of the investment. That level of detail is not required under disclosure rules.

The Star’s Steve Vockrodt, Bryan Lowry and Hunter Woodall contributed to this report.
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