RALEIGH — Political analysts from both parties said they had concerns Wednesday about whether Gov. Pat McCrory had been forthcoming about payments of more than $185,000 in cash and stock that he accepted from a Charlotte mortgage broker after he took office last year.
The Associated Press reported Dec. 16 that McCrory and U.S. Rep. Mark Sanford of South Carolina each received six-figure payouts — while holding elected office— from Tree.com, the corporate parent of the website LendingTree. The two Republicans had served on the company’s board and resigned after they won election, which would have rendered their unvested shares in Tree.com worthless. The board voted to give them the shares anyway.
“It’s one of those things that creates a smell,” said Carter Wrenn, a Republican strategist whose past clients included the conservative icon Sen. Jesse Helms. “If the payment was for legitimate work and it didn’t have anything to do with politics, that would be OK. But you’re better off to disclose it, because it’s going to raise questions. … And when you don’t disclose, it looks like maybe you were trying to sweep something under the rug.”
McCrory’s office issued several statements denying the governor had done anything improper or illegal, saying he had adequately disclosed the income and his business relationship with the company on his ethics forms. McCrory’s re-election campaign appealed to supporters for cash to “fight back” against the AP report.
“I continue to uphold high ethical standards and follow the law,” McCrory said in a written statement.
Sanford disputed the AP’s report in an interview with his hometown newspaper, The Post and Courier of Charleston.
The AP investigation relied on public documents Tree.com filed with the U.S. Securities and Exchange Commission, interviews with top company officials, and ethics disclosure forms filed by the politicians.
North Carolina officials are required to disclose their business dealings and their sources of compensation on annual ethics forms.
On his forms covering 2013, McCrory didn’t disclose the $14,438 in fees and cash dividends he received from Tree.com. The forms specifically ask officials to include stock dividends and fees exceeding $5,000 from a single source.
McCrory’s office said the governor wasn’t required to disclose his cash compensation from Tree.com, citing a passage in state law reading: “if that source is not listed under subdivision (2) of this subsection.” Because McCrory had disclosed owning more than $10,000 in Tree.com stock, as required under subdivision (2), McCrory spokesman Josh Ellis said the governor had no obligation to report his Tree.com income later on the same form.
Jane Pinsky, director of the nonpartisan North Carolina Coalition for Lobbying & Government Reform, said she had never heard that interpretation of the statute.
“The governor should be setting an example,” Pinsky said. “He can’t just play to the letter of the law, but needs to follow the spirit of the law. He should be, if anything, over disclosing. He should be showing that ethics matter and that filling out those forms matter.”
Thomas Mills, a Democratic political strategist in Raleigh, said the payments could damage McCrory’s 2016 re-election bid, especially since he originally ran on a platform of transparency and clean government.
“He can argue that it’s legal all he wants, but that doesn’t matter in politics. It’s how the public perceives what he did — and this looks sleazy,” he said.
Timeline of Gov. Pat McCrory’s payouts from Tree.com:
—January 4, 2013: McCrory files notice of resignation from board of Tree.com, with an effective date of Jan. 31.
—January 5, 2013: McCrory sworn in as governor.
—January 30, 2013: Tree.com board votes to accelerate vesting of McCrory’s remaining 10,063 shares of restricted stock units, converting them to common shares with a cash value on that date of $171,071.
—March 18, 2013: McCrory appoints Ray Grace as acting Commissioner of Banks. The staff he supervises has regulatory oversight over mortgage brokers such as Tree.com’s subsidiary LendingTree.
—April 12, 2013: McCrory paid $10,063, a special dividend, by Tree.com, $1 a share for each restricted stock unit owned at end of 2012. At some point in 2013, he is also paid $4,375 in director’s fees, bringing his total cash compensation from Tree.com for the year to $14,438.
—April 15, 2013: McCrory files ethics disclosure form covering 2012. He doesn’t disclose his “business association” with Tree.com for 2012 or the potential conflict of interest created by the state’s regulatory oversight of the company.
—April 30, 2013: McCrory appoints eight members to state Banking Commission. His appointees now make up a majority of the 14-member board.
—April 15, 2014: McCrory files his ethics disclosure form for 2013. McCrory does not disclose the $14,438 in director’s fees and cash dividends he received from Tree.com in 2013. The ethics form instructs officials to disclose all sources of income of more than $5,000, including any salary, wages, professional fees and dividends.
—December 17, 2014: McCrory denies any wrongdoing, saying he fully complied with the law.