Campaign Debts

We could call it the $11,000 lesson: Always make political candidates pay up front.

Richard Berberian, who owns a North Shore multi-media company, learned it over the last few years when it became clear he’d never see a check for the $11,000 bill still owed by The Paleologos Committee. As in former state Rep. Nicholas Paleologos, who ran for lieutenant governor–in 1990.

The Democrat from Woburn had Berberian’s Wilmington-based IAN Communications duplicate 50,000 slick campaign videos and mail them to likely Democratic voters across the state before the 1990 September primary at a cost of more than $100,000. Paleologos paid most of the bill, but did not have enough left in his campaign coffers to cover the last $11,000.

“We are a small company. That is not a small amount of money,” said Berberian, who has long produced campaign placards and other political paraphernalia for people running for public office. “Would I do business with any political candidate who was not pre-paid in the future? No.”

Paleologos, whose campaign at last count still owed about $179,000, is far from the only political hopeful to end an election bid with debts. But his have something notable–staying power, according to a CommonWealth review of records filed with the state Office of Campaign and Political Finance.

The office does not keep formal track of which candidates have the largest or longest-running liabilities. But Denis J. Kennedy, director of public information, says “it’s improbable” that any candidate for state office would have a larger long-term debt than Paleologos.

“It’s not uncommon for a campaign to end an election year with substantial debts,” Kennedy says. “Chances are, by the next annual report … most if not all of them are paid.”

That certainly seems true for most of the winners. But it’s a lot easier said than done for the losers, who usually have little luck raising money after election day.

Often, the biggest creditors end up being the candidates themselves.

Of The Paleologos Committee’s total debt in January, about $34,000 is due to local businesses for services ranging from printing to water delivery. But the majority–$145,000–is actually owed to Paleologos himself for a personal loan he gave the campaign. (Although the loan amount was recorded as $98,000 in the campaign’s 1990 year-end report, it had jumped to $145,000 in the 1997 year-end report, the most recent filed, because Paleologos is charging the campaign interest. However, it’s unlikely he’ll ever get the extra money because candidates are not allowed to collect interest on personal loans.)

Paleologos, who lost the Democratic nomination for lieutenant governor to Marjorie Clapprood and has since been making a name for himself as a film producer (“Quiz Show,” among others), did not return phone calls seeking comment.

It should be noted that his debts pale in comparison to the record amount–$1.3 million–owed by the campaign of former Gov. William Weld at the end of the 1990 season.

The Weld for Governor committee had a $190,000 tab with local businesses after the election that propelled him into the corner office. The rest of the debt–about $1.1 million–was to Weld himself. That was the year he refinanced the mortgage on his million-plus-dollar Cambridge home to help pay the campaign costs.

But as the new governor, it wasn’t too difficult to find people willing to help him retire that. By the end of 1991, the campaign had paid all of its outstanding bills in full and had returned a good chunk of Weld’s loan. He was paid back completely by September 1993.

It’s unlikely that any candidate for state office will beat Weld’s end-of-campaign debt record. In 1994, the Legislature passed new campaign finance rules that limit a gubernatorial candidate’s personal loans to $200,000. And it’s doubtful someone would rack up more than $1 million worth of unpaid bills.

But what about the creditors still owed money after the campaign headquarters close down? Does the state help them collect?

“We’re not in the business of telling people to pay their debts,” says Kennedy of Campaign and Political Finance. “We’re not the ones who decide [if debts are a problem]. The voters decide.”

The office’s only responsibility when it comes to debts is to check whether a business forgives one when it’s not standard practice to do so. That would make it a corporate contribution, which is prohibited in Massachusetts.

“There could be a very real problem if it were found out that the creditor didn’t make the same attempt to collect on that debt as he or she did on any other debt,” says Joshua Friedes of Common Cause Massachusetts, a good government watchdog group. But, Friedes adds, the unpaid bills don’t tend to be outrageously large: “Campaigns are not viewed as great risks by creditors.”

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Berberian (whose company is now called IAN Multi-Media Group and is located in Burlington) says Paleologos expressed remorse for not being able to pay for the videotapes, but explained that he simply did not have the money. Eventually, Berberian stopped asking for it and, as is the company’s practice, wrote it off as bad debt.

The experience colored his opinion of politicians, but it wasn’t the first time he was left hanging by a candidate for public office. “Only a couple who have lost their elections have come forward and paid the debt off,” Berberian says. “Others have walked away and said, ‘Sorry, there’s no more funds left. Have a good day.’ ”