Time To Start Asking the Hard Questions About Trippi and the $40 Million

Posted on January 31, 2004

I have held off commenting on the post-New Hampshire reorganization at Dean for America (DFA) for the last few days because I wanted to take a little time and figure out how I really felt about it before I said anything. I think now that I’ve worked through my varying thoughts enough to point out some issues that really, really need addressing.

In case you didn’t hear, the big news in the reorg was the ousting of Dean campaign manager Joe Trippi. This was a Big Deal, because Trippi was the architect of the whole netroots strategy that lifted Dean to prominence in the first place. He was also, of course, the man in charge during the Iowa and New Hampshire primaries, which is why he’s on his way out, to be replaced by former Gore aide (and telecommunications lobbyist) Roy Neel.

The story as we’ve heard it from DFA is that Trippi’s leaving because he bet big on Iowa and New Hampshire, and lost. That may be even be true as far as it goes. But some disturbing facts have come to light since Trippi’s departure about the way business was being done at DFA under his watch, and they demand comment if DFA is going to retain the trust of anybody who has contributed financially to it thus far.

The first issue is one that I’d heard buzzings about starting a few days before the Iowa caucuses, but now that Trippi’s out it’s been confirmed — Trippi, while serving as campaign manager, had turned down a salary, instead choosing to be compensated with a 15% commission on all ad buys. It’s not hard to understand why he would prefer such an arrangement — the biggest money a campaign spends is on media, so 15% of that is much more than any salary he would have drawn.

Now, this type of arrangement is not uncommon among political operatives, so — while I would prefer that our guys be less grasping than the average hired gun — it alone is not enough to set off my ethics alarms. However, there’s another issue that compounds the problem substantially. It turns out that the agency that Trippi chose to create and place DFA’s ads — those same ads that he was getting a 15% commission on — was none other than a little outfit named Trippi McMahon & Squier (TMS), a political communications firm whose partners include — yes, you guessed it — Joe Trippi.

Here’s why these two facts, taken together, should seriously trouble any DFA contributor. They mean that, every time Trippi went to buy a new ad, he was negotiating, essentially, with himself — or, at any rate, with his own company. In such a situation there would be no reason for him to lean on the vendor to keep costs down. Indeed, there would be a positive incentive to keep costs up, since every dollar that went to TMS for ads put fifteen cents in Joe Trippi’s pocket!

This is the very definition of “conflict of interest” — and yet there were (apparently) no CPAs or attorneys on the Dean campaign doing even basic due diligence over these types of business arrangements, nobody looking over Trippi’s shoulder to be sure that he was spending the $40 million he raised from average folks responsibly. (Also, it meant that when DFA received low-quality product from TMS, like their Iowa ads, there was no independent voice to push them to do better, which may have resulted in bad ads being held onto longer than they should have been.)

Does this mean that Trippi defrauded DFA, and all those of us who gave to it? No, not necessarily. But it doesn’t mean he didn’t, either — and it’s not as if the opportunity wasn’t there to do so. All it means is that we don’t know if he did or not, and we’re left trying to account for $40 million that essentially evaporated in the space of a couple of weeks.

Now, you could explain that missing money in a way that leaves Trippi completely innocent of wrongdoing. Just imagine yourself as Joe Trippi, back in the fall of 2003, watching your candidate start to rocket up the polls. What once looked like an impossibility — winning the Iowa and New Hampshire primaries — suddenly seems within reach. You decide to risk everything on a knockout punch, throwing your whole budget into trying to secure first-place finishes in both contests. Of course, it fails, and the chickens come home to roost; you gambled and lost. But that’s just bad politics, not malfeasance of any kind.

But — and this is the big “but” — you can construct scenarios that are just as plausible that do involve wrongdoing. Imagine now that you’re Trippi, and that you made that big bet on Iowa and New Hampshire, but in this case, you’re not an idiot — you bet big, but you didn’t bet every last penny on those two contests. Even if you lose both (and how could THAT happen?), you’ve left $10 or $15 million in reserve to keep you afloat through February. But then comes Iowa, and as the results start to roll in it becomes clear that your strategy hasn’t just failed, it’s imploded. Your candidate comes in third, and then, later that night, your candidate — who you’ve worked night and day for a year to bring to this point — looks you in the eye and tells you that you blew it, that he doesn’t have confidence in you anymore, and that while he can’t ask you to leave now — too close to New Hampshire — as soon as the polls close in NH, your work at DFA is finished. Don’t let the door hit you on the way out.

It’s not hard to imagine someone in such a position looking at the money in reserve, looking at his own situation, and thinking to himself, Screw Dean! He tossed me out on my ass as soon as he decided I wasn’t useful anymore. I’ve got a week left before they fire me, and a primary coming up to win — let’s burn through all the cash this week, every penny! We’ll win, and the 15% will soften my landing a bit… And so what was once a reserve gets tossed into the furnace of the New Hampshire media buys, leaving Dean to look up in shock the day after and find himself essentially broke.

Did it happen that way? I seriously doubt it; everything I’ve heard and read about Trippi is that he’s an idealist who likely failed to sweat the details, rather than came up with any conscious scheme to defraud DFA. But the problem is, we don’t know how it happened! The blog is silent on the Trippi/TMS conflict-of-interest issue; Dean and Neel aren’t saying anything; and Trippi is pledging his ongoing support for his old boss. All we know, we little people who built that $40 million war chest, is that we entrusted it to Trippi, it disappeared, and he stood to profit from spending it — and nobody’s telling us anything concrete to convince us that the worst case scenarios aren’t true. All they’ll tell us is “look, new boss! Trippi’s gone now! Problem solved!” Which isn’t very satisfying for me, since if the only thing that stands between our contributions and the campaign manager’s pocket is the goodness of his heart, it’s going to be the rare manager who doesn’t end up falling prey to temptation.

So, in my opinion, I can’t in good conscience recommend that anybody contribute one dime further to DFA until they frankly and candidly answer the following questions:

• In the months leading up to the Iowa caucus, how much money was raised through small individual contributions (the “$100 Revolution”?)
• Of this money, how much ended up being spent on media (TV, radio, etc.) subject to Trippi’s 15% commission?
• Of that figure, how much was booked through Trippi McMahon and Squier, and how much (if any) through other agencies?

I put in my $100 into the $100 Revolution. The way I see it, that makes me a shareholder, and as a shareholder I have some basic rights, including the right to know how my investment in DFA was being managed. If the new management disagrees, that tells me everything I need to know about their commitment to shooting straight with the people who’ve worked hard to raise Howard Dean from an asterisk in the polls to a national political figure.

Because in the end, that’s what gets me the most upset about the whole situation. It’s not the money — I can live without the $100. It’s that the people I’ve met through the Dean campaign have been some of the most smart, passionate, involved, and civic-minded people I’ve ever had the privilege to meet. Many of them have given far more generously of their time and money than I did. All of them answered the call to “take our country back” not by asking what was in it for them, but by opening their hearts and wallets to do whatever they could to make it happen. If the end result of all of that work, all of that commitment, is just to line the pockets of a couple of political operatives, then I want to see those operatives get what they deserve — public scorn and humiliation, and punishment to whatever extent the law allows. Nothing less would be appropriate for abusing the trust of half a million people whose only fault was caring too much for the future of their country.

We Democrats have a responsibility in our nominating process to look for a candidate with the moral fortitude to do the right thing, even when doing so is tough. For a long time, I’ve thought Howard Dean was that kind of man. How he addresses these issues will have a big role to play in whether I continue to hold that particular opinion.