A brochure from Mike Pence’s 1988 House race, the first of two election defeats that helped shape Pence’s future political image. (Congressman Philip R. Sharp Papers/Ball State University Libraries)

Mike Pence used campaign funds to pay his mortgage — and it cost him an election

By Rosalind S. Helderman, Tom Hamburger and Alice Crites July 15

Mike Pence was a young lawyer on the rise, challenging a longtime Democratic congressman in a Republican-leaning Indiana district.

And then, scandal.

Campaign finance records from the 1990 effort showed that Pence, then 31, had been using political donations to pay the mortgage on his house, his personal credit card bill, groceries, golf tournament fees and car payments for his wife.

The spending had not been illegal at the time. But it stunned voters — and undermined Pence’s strategy to portray the incumbent, Rep. Philip R. Sharp, as tainted by donations from special-interest political action committees.

“It was a brazen act of hypocrisy,” said Billy Linville, who was Sharp’s campaign manager. “It was a bombshell, for sure. . . . Without question, he may well have won the election if it had not been for that.”

Pence’s early stumble proved to be a defining moment, prompting a period of public remorse that helped create the wholesome image many Republicans now say makes him an ideal running mate to counterbalance the bombastic Donald Trump.

In the months after that 1990 defeat, Pence waged a statewide apology tour and disavowed negative campaigning. He told a local reporter that using campaign funds for personal expenses had been “an exercise in naivete.”

Pence’s 1990 race also led to key changes in campaign finance policies. Experts say that subsequent rules passed by the Federal Election Commission barring the use of campaign funds for personal needs were the direct result of ethics concerns raised by Pence’s actions.

Jason Miller, a Trump campaign spokesman, said that Pence had done nothing wrong in the 26-year-old episode and that the FEC had determined that he was “100 percent compliant with the law at that time.”

Pence first challenged Sharp in 1988, losing to the then-seven-term incumbent by more than six percentage points. Pence’s line of attack was narrow, mostly focused on the support Sharp received from PAC money.

But that campaign provided early hints that Pence was willing to go for the jugular. One Pence mailer depicted images of a razor blade, white powder and rolled-up cash, and declared: “There’s something Phil Sharp isn’t telling you about his record on drugs.” The brochure left readers hanging until a subsequent page: “It’s weak,” the ad read, using letters formed in powder.

The Washington Post obtained a copy of the brochure from Sharp’s archived papers at Ball State University in Muncie, Ind.

This brochure was sent to voters by Mike Pence’s 1988 congressional campaign during his race against Rep. Philip R. Sharp (D). The mailer, with a handwritten annotation, has been saved as part of Sharp’s archived papers. (Congressman Philip R. Sharp Papers/Ball State University Libraries)

Two years later, Pence tried again, promising to focus on issues Indiana voters cared about and accusing his Democratic opponent of favoring big government. Pence wanted to win so badly that, according to a local newspaper report at the time, he kept a sign in his office that read “congressman in training.”

When news of Pence’s campaign spending broke, his opponent made the most of it. Linville, Sharp’s campaign manager, held a news conference, waved Pence’s campaign finance reports in the air and declared, “If you’re giving money to Mike Pence, you’re paying his mortgage.”

According to FEC documents, Pence spent a total of $12,867 from his 1990 campaign account for personal expenses, including seven installments of his $992 monthly mortgage and his wife’s $222 a month car payment.

Pence was unapologetic at the time, telling reporters that he had taken a 30 percent pay cut to run for office and needed the money. “I’m not embarrassed that I need to make a living,” he said.

“He doesn’t come from a wealthy family. He’s not gentry,” added Pence’s campaign director at the time.

In an interview, Sharp said that argument now makes some sense to him as a way to allow people of modest means to run for office. But, he said, at the time, voters were surprised by the uncommon practice. “This was using other people’s money that was supposed to go for the campaign and not your personal enrichment,” Sharp recalled.

With his election chances in doubt, Pence hit back hard at Sharp.

Phone banks supporting his candidacy used callers who posed as members of environmental groups, telling prospective voters that they had shifted their support from Sharp to Pence because the congressman was selling his family farm in Illinois to become a nuclear waste dump, according to news reports at the time.

Pence also ran a television ad in which a man dressed in stereotypical Arab robes and sunglasses and effecting a fake thick Mideast accent thanked Sharp for ensuring U.S. reliance on foreign oil. The ad drew protests from Arab American groups and was denounced by Indiana editorial boards.

Sharp recalled this week that the ad backfired on Pence, turning off independent voters who Pence would have needed to persuade to abandon the incumbent. “I think I generally was viewed as pretty vanilla, Midwestern,” Sharp recalled. “I think that was viewed as just over the top.”

This 1988 Mike Pence for Congress brochure shows Pence with his wife and dog. (Congressman Philip R. Sharp Papers/Ball State University Libraries)

Pence lost the race by 19 points.

The fallout from the campaign misfire lingered. The Democratic Congressional Campaign Committee had filed a complaint during the campaign with the FEC over personal spending by Pence and three other Republicans who ran for office in 1990.

“These were important cases,” recalled Lawrence Noble, who served as general counsel to the FEC at the time. “They showed that a real problem existed and caused the commission to deal directly” with regulating the use of campaign funds for personal use.

Three weeks after the election, the FEC deadlocked in a 3-to-3 vote over whether to pursue the matter. But the debate led to a larger discussion of the issue of campaign funds and personal ex­penses.

The commissioners had been guided by a legal analysis written by an FEC staff attorney saying that the rules prohibited incumbents but not challengers from using excess campaign funds for personal use. The Pence-friendly opinion was written by Lois Lerner, who years later became an official at the Internal Revenue Service, where she has faced persistent criticism from Republicans over her handling of the tax status of conservative groups.

The commissioners — three Democrats and three Republicans — voted unanimously to begin a process to rewrite rules to ban the personal use of campaign funds by all candidates.

“It was a landmark issue,” recalled Trevor Potter, who joined the commission in 1991 and helped shepherd in the new rules.

Miller, the Trump campaign spokesman, pointed to the FEC’s proceedings to underscore that Pence had done nothing wrong.

“The nonpartisan Office of General Counsel at the FEC reviewed them, and the complaints were dismissed,” Miller said.

Pence, who had incorporated his deep Christian faith into his campaign, also had to deal with the repercussions of his negative efforts, which had hurt his public image.

He offered advice for how would-be candidates could avoid the financial pinch that led him to tap campaign funds for personal expenses: “Don’t quit your day job.”

As for the negative campaigning, he expressed regret. He told the Daily Journal of Franklin, Ind., that the nuclear-waste-dump phone calls had been “a manifestly dumb idea” and declared that “personal attacks are not a legitimate part of a campaign.”

Linville, Sharp’s 1990 campaign manager, recalled that Pence wrote Sharp a lengthy personal letter of apology. In 1991, Pence published an open letter to state residents called “Confessions of a Negative Campaigner” in the Indiana Policy Review that bluntly stated “negative campaigning is wrong.”

He laid out principles that he believed should guide future campaigns. The first: “A campaign ought to demonstrate the basic human decency of the candidate.”