A Favor Repaid

Dick Gephardt raises big bucks for former finance director Terry McAuliffe
Terry McAuliffe / AP

Terry McAuliffe / AP


Terry McAuliffe’s work on Dick Gephardt’s failed 1988 bid for president is paying dividends as the Democrat, who has never before held elective office, campaigns for Virginia governor.

McAuliffe’s relationship with the former Missouri congressman stretches over more than a quarter century and involves allegations of unethical conduct. He recently attended multiple fundraisers held by Gephardt or members of his political circle.

Gephardt himself cohosted a fundraiser for McAuliffe in March that brought in $170,000 for the campaign. Steve Elmendorf, a long-time aide to Gephardt and a fellow staffer on the 1988 campaign, cohosted the event.

McAuliffe joined Missouri Democratic activist Joyce Aboussie for a fundraiser at her St. Louis home on March 28. Aboussie was the field director for Gephardt’s presidential campaign.

Aboussie is considered one of the most powerful Democratic operatives in the state. Elmendorf and Gephardt both work for high-powered Washington, D.C., lobbying firms. McAuliffe’s work with those colleagues has been a significant source of political muscle.

Requests for comment from Gephardt, Elmendorf, and Aboussie were not returned.

Gephardt lobbied McAuliffe to work on the 1988 campaign, according to the latter’s memoirs.

“Dick desperately wanted me have me as his finance chairman and started calling me morning, noon, and night, most every day, for several months,” McAuliffe wrote.

The two are close friends. Gephardt attended McAuliffe’s wedding. They vacationed together in Telluride, Colo. Gephardt showed up at McAuliffe’s house on Christmas day, 1993, to give his kids a puppy.

As his campaign’s finance chairman, McAuliffe helped Gephardt woo donors who were skeptical about backing a House member for president. But his business connections also helped secure financing for the effort, in a scheme some said was inappropriate.

Federal City Bank extended a $125,000 loan to Gephardt’s campaign in August 1987. At the time, McAuliffe was both the campaign’s finance chairman and director of Federal City. The next year he would be appointed as the bank’s chairman.

The New York Times reported that the loan was unsecured, meaning “Gephardt could have received a financial advantage over any rival who was unable to obtain unsecured loans early in the campaign.” The campaign disputed that claim.

Gephardt’s treasurer, S. Lee Kling, also chaired a bank that gave the campaign an unsecured $75,000 loan, according to the Times.

“The fact that the chairman and the treasurer are both bankers looks a little bit incestuous to say the least,” the late Herbert Alexander, a campaign finance expert at the University of Southern California, said at the time.

Federal election law required that loans to campaigns be made “in the ordinary course of business.”

“The law talks about prudent business decisions,” Alexander said. “It might not be a prudent business decision to make a loan in those circumstances and therefore it may be considered a contribution” that was not reported as such.

Federal City also extended a loan to then-House Democratic Whip, Rep. Tony Coelho, whom McAuliffe describes in his book as an “old friend.” Coelho has donated to McAuliffe’s ongoing gubernatorial campaign.

Coelho has been credited for creating a Democratic fundraising apparatus that rewarded corporate donors for contributions to the Democratic Party’s House election efforts.

McAuliffe, who helped Coelho court donors to the Democratic Congressional Campaign Committee, brought that approach to fundraising to the Democratic National Committee, where he offered lobbyists access to top party officials in exchange for $15,000 contributions.

McAuliffe has said that his work in politics has bolstered his business career.

“I’ve met all of my business contacts through politics. It’s all interrelated,” he told the New York Times in 1999.

Lachlan Markay   Email | Full Bio | RSS
Lachlan Markay is a staff writer for the Washington Free Beacon. He comes to the Beacon from the Heritage Foundation, where he was the conservative think tank's first investigative reporter. He was also a contributing editor for Newsbusters.org. His work has appeared in the Wall Street Journal, the Washington Times, and the Washington Examiner. He graduated from Hamilton College in 2009, and currently lives in Washington, D.C. His Twitter handle is @lachlan. His email address is markay@freebeacon.com.

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