Grand jury convened amid federal investigation into money missing from Chabot campaign

Grand jury convened amid federal investigation into money missing from Chabot campaign
Congressman Steve Chabot has filed for re-election - and it comes as FOX19 NOW has learned there is a federal investigation into his campaign finances with a grand jury convened in Cincinnati. (Source: Chabot For Congress Facebook page)

CINCINNATI (FOX19) - Congressman Steve Chabot has filed for re-election, and it comes as FOX19 NOW has learned there is a federal investigation going into money missing from his campaign with a grand jury convened in Cincinnati.

In September, an attorney for Chabot’s campaign, Mark Braden, announced the campaign appeared to be the victim of a financial crime and campaign finances were undergoing a “thorough audit.”

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The West Side Republican officially filed for reelection in 2020 on Tuesday, his campaign said in a news release that said he submitted the required petition signatures and paperwork with the Ohio State Elections Office.

The news release makes no mention of the issues with his campaign finances or the federal investigation into them.

“It’s my honor to champion our communities and deliver results for hardworking Ohio families in Washington,” Chabot said in the prepared statement.

“While my two opponents obsess over impeachment and embrace Elizabeth Warren’s radical agenda, I remain focused on delivering results for hardworking Ohio families.”

“I am fighting to combat the opioid crisis, end sex trafficking, create jobs, lift wages and support Ohio small businesses,” Chabot continued. “I look forward to earning the support of Ohio voters over the next year and continuing to fight for common-sense results for Ohio families.”

The release goes on to state:

"Chabot officially begins his 2020 bid in a strong position to win reelection. In the third quarter of 2019, Chabot raised $420,000, his best non-election year fundraising haul in the 13 cycles since he was first sworn into office. The Republican Party and conservatives are also firmly united behind Chabot and his record of common-sense results for Ohio.

"In recent months, Chabot has been endorsed by Ohio Republican Party Chairman Jane Timken, Hamilton County GOP Chairman Alex Triantafilou, Hamilton County GOP Chairman Jeff Monroe and Rep. Jim Jordan (R-OH-04). Chabot also received public statements of support from the Susan B. Anthony List, a leading national pro-life grassroots organization, and the influential conservative organization Club for Growth Action, which vowed to “vigorously defend and support him to win and keep his seat.”

Chabot’s longtime campaign manager, Jamie Schwartz, who also served as a former aide for the congressman, has been gone now for months.

Schwartz’s father, Jim Schwartz, was listed as the campaign treasurer, but he has since said he never served in that role.

Neither man has been charged with a crime.

We are told by a person with knowledge of the situation there has been a federal investigation for a while now, since Jamie Schwartz turned himself into the U.S. Attorney’s Office for the Southern District of Ohio in September. The campaign is cooperating with federal law enforcement in their investigation.

We reached out for comment to the Chabot for Congress campaign and received the following statement from attorney Megan Sowards Newton:

“Since learning Congressman Chabot was the victim of financial malfeasance in September, Chabot’s campaign has and continues to fully and proactively cooperate with both the FEC and law enforcement to get to the bottom of this matter. In addition, the campaign has committed to working with the FEC to correct any inaccuracies in its reports that may stem from the malfeasance. The campaign has assembled a professional team, including a forensic accountant, to conduct a thorough internal audit of its finances. The investigation and internal audit are active and ongoing, and it would therefore be premature to discuss conclusions.”

A spokeswoman for the U.S. Attorney’s Office told us: “We can not confirm or deny the existence of any investigation.”

A spokesman for the FBI Cincinnati has told us as a matter of policy they cannot confirm or deny the existence of potential investigation.

The Federal Election Commission also can’t comment on any kinds of investigations as a matter of standard practice, FEC spokesman Miles Martin has told FOX19 NOW.

Schwartz could not be reached Wednesday for comment.

Chabot told our media partner at the Cincinnati Enquirer in an October interview discovering money was missing from his campaign was “obviously a blow” and he was disappointed.

Chabot told The Enquirer he always thought Jim Schwartz was the treasurer and Jamie Schwartz was in charge of “FEC compliance.”

Jamie Schwartz has since been replaced by Natalie Bauer, who also is the campaign treasurer for U.S. Senator Rob Portman, R-Ohio.

The Federal Election Commission sent a letter to the campaign’s treasurer, who at that time was listed as Jim Schwartz, seeking details about an amended campaign finance report.

The Aug. 27 letter from the FEC noted that an amended report filed by Chabot’s campaign showed a $123,625.72 increase and asked Schwartz to clarify why the money wasn’t originally disclosed.

In the most recently letter to the campaign treasurer, FEC officials request more information. They said they were prompted to write by the Commission’s review of the campaign’s October quarterly report.

In that report, the campaign included a memo, which reads:

“Due to an internal audit after the discovery of misappropriated funds, the beginning cash on hand is an estimate based upon the information the committee has at the time of this filing. The cash adjustments may change in the future depending on additional information that may present itself. Additionally, a number of disbursements list the purpose as unknown. The purpose of those can not be determined until the completion of the investigation of the former Treasurer.”

The FEC’s latest letter to the Chabot campaign notifies the campaign of totals listed in the October report summary that “appear to be incorrect." It requests the campaign file an amendment to the report to correct the “discrepancies" for this report and all subsequent report(s) which may be affected by this correction."

The letter goes on to state: "The beginning cash balance of this report should equal the ending cash balance of your July Quarterly Report. The Commission notes the memo text included with your report which states that 'Due to an internal audit after the discovery of misappropriated funds, the beginning cash on hand is an estimate based upon the information the committee has at the time of this filing.

“The cash adjustments may change in the future depending on additional information that may present itself. Additionally, a number of disbursements list the purpose as unknown. The purpose of those can not be determined until the completion of the investigation of the former Treasurer..' Please provide any additional information regarding this discrepancy should it become available."

The letter also states “itemized disbursements must include a brief statement or description of why each disbursement was made.”

The campaign has until Jan. 13 to respond.

Two Democrats, meanwhile, have announced they are challenging Chabot: Kate Schroder and Nikki Foster.

No Republicans have filed to run against Chabot as of Wednesday, according to election officials.

The deadline for candidates of any office in Ohio who want to be on the March primary ballot is 4 p.m. Dec. 18.

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