Apr 14, 2022 - Politics & Policy

RNC questions Virgin Islands GOP fundraising

Illustration: Sarah Grillo/Axios

The Republican National Committee is threatening legal action against the former chair of the Virgin Islands GOP, who for years has used the post to rake in money spent less on candidates than political consultants and fundraising vendors.

Driving the news: The RNC's general counsel sent a cease-and-desist letter on Wednesday to John Canegata. The former territorial party chairman continues to represent himself as its leader despite being forced out by the national party.

  • The letter demands Canegata stop claiming to be the head of the territorial party, and cease the use of the Republican Party brand in official communications.
  • The RNC also disavowed a separate political group run by Canegata called the "Virgin Islands Republican Party."
  • It's not a party committee but political action committee Castegata has used for years to raise millions under the "VIGOP" moniker.
  • Canegata defended the group in emails with Axios and said he'll be suing the RNC to secure his position in the party against a new slate of RNC-backed leaders, which he says were illegitimately elected.

Between the lines: Canegata's internal rivals have long accused him of using the PAC to advance his own interests.

  • Of the more than $10 million the PAC has spent since 2013, at least two-thirds went to 10 fundraising and direct-mail vendors, according to Federal Election Commission records. It donated just 3% to other campaigns and committees.
  • Another $2.1 million went toward ostensible political expenditures supporting or opposing candidates. Mostly direct mail pieces, they generally coupled political advocacy with appeals for more money and were largely routed through the same D.C.-area fundraising vendors.
  • A territorial party audit, commissioned by Canegata's internal challengers in late 2020 and obtained by Axios, concluded the PAC "serves no legitimate function."
  • The audit said it "exists only to benefit Washington political consultants, and serve as a fund under the exclusive control of Mr. Canegata."

Canegata attributes its expenses to the high cost of fundraising.

"It’s printing and postage that make up 80% of the average direct mail fundraising package," he told Axios in an email.

  • "I am proud of our fundraising initiative that has allowed us to spend hundreds of thousands of dollars in races to elect Republicans who fight for lower taxes, less government, traditional values and personal freedoms."

Why it matters: Canegata's group has long drawn scrutiny from watchdogs who say it spends an inordinate portion of its funds on fundraising and overhead.

The RNC accused Canegata of using the GOP brand to raise money for the group without authorization from the national party.

  • "False representations that solicitations are being made for the benefit of the Republican Party is a federal crime," it warned.

The backstory: Canegata was ousted as chairman in 2020 after the RNC found him in violation of party rules.

That prevented the Virgin Islands from seating delegates at the 2020 Republican National Convention held in Washington and on the White House grounds.

  • The RNC oversaw elections for a new leadership slate last month. Canegata was not on the ballot, but the RNC says he tried to obstruct the contest and continues to hold himself out as chairman in official communications.

What they're saying: "Neither you, nor the VIGOP PAC have any official relationship with the RNC nor do you have any authority to utilize the name of the RNC or any RNC-held trademarks," general counsel Kyle Hupfer wrote.

  • Canegata told Axios he plans to add the RNC as a defendant in a lawsuit filed last week against his internal territorial party rivals, in light of the national committee's letter.
  • The lawsuit claims the RNC-led caucus was "illegal" and "was not held in conformity with Virgin Islands law."
  • It asks a judge to stop the new territorial party leaders from acting on its behalf.
  • The Virgin Islands board of elections, which Canegata claims refused to sanction the caucus, has asked the territory's attorney general to resolve the matter.

What's next: The RNC gave Canegata until 5pm Friday to sign an "agreement to cease and desist" pledging to comply with the letter's demands.

  • "If an adequate response is not received," the committee wrote, "the RNC intends to take such action as it deems necessary to protect its reputation and proprietary rights."
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