Keep the Promise II

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Keep the Promise II is a super PAC that backed Ted Cruz's 2016 presidential run. Unlike the other super PACs supporting Cruz, Keep the Promise II operated independently of the umbrella group Trusted Leadership.[1] Dathan Voelter, treasurer and custodian of records, filed the Statement of Organization on April 6, 2015.[2] Keep the Promise II does not have an organizational website, and there was speculation in March 2016 that the super PAC was no longer active.[3]

2016 Election Activity

Keep the Promise II Suspends Activity

On June 23, 2016, the Texas Weekly reported that Keep the Promise II suspended its campaign activities and refunded nearly $9 million to sole contributor Toby Neugebauer. Neugebauer transferred his support to Donald Trump.[4]

Contributors

Houston investor Toby Neugebauer was the only donor funding Keep the Promise II, donating $10 million on April 9, 2015.[5] As of April 4, 2016, this $10 million donation remained the only contribution to the super PAC and represented one of the largest contributions by an individual in the 2016 election cycle.[6]

Toby Neugebauer

Neugebauer is the son of Texas Rep. Randy Neugebauer (R), who represents Texas's 19th congressional district, co-founded Quantum Energy Partners, and is an investor in the energy and oil sector.[7]

Neugebauer has a history with Texas Governor Rick Perry, as noted by the Texas Observer in 2011: "Neugebauer and his wife have long supported Perry, donating more than $110,000 to him, according to Texans for Public Justice. Neugebauer may have been supporting Perry because he liked his ideological bent. But he also has a financial interest in backing the governor. Neugebauer is a managing partner at Quantum Energy Partners, a Houston private equity firm that has invested millions in energy production in Texas. The firm invested heavily in the controversial natural gas drilling in North Texas’ Barnett Shale formation. The Texas Commission on Environmental Quality -- the state’s regulatory agency, whose leaders Perry appoints -- regulates drilling in the Barnett shale."[8]

Neugebauer is an active contributor to conservative campaigns and causes, donating $100,000 on February 24, 2016 to Keep the Promise to Veterans, another super PAC backing Ted Cruz.[9]

According to the latest FEC filings, Neugebauer lives in Dorado, Puerto Rico.[9] It is speculated that Neubegauer moved to Puerto Rico in order to take advantage of Act 22, a 2012 law eliminating the capital gains tax for new residents.[10] According to Bloomberg Businessweek, Neugebauer indicated that his primary reasons for moving to Puerto Rico were opportunities for his children to learn Spanish and attend good schools and better investment opportunities: "I wouldn’t have moved for the taxes, but it is an interesting proposition."[11] As reported by The New York Times, another draw is that the "United States federal government does not impose any federal income taxes when U.S. citizens who are residents of the island earn income from Puerto Rican sources."[12][13] One must have lived in Puerto Rico for 183 days in order to obtain residence. Effectively, capital gains attained after moving to Puerto Rico are exempt from all taxes.

Expenditures

Of the $10 million contributed to Keep the Promise II, nearly $9 million remained untouched as of April 2016.[14] According to The Wall Street Journal "Mr. Neugebauer said he wanted to wait to spend his money when it would count, and that moment is now arriving. 'You knew for Ted to win this was not going to be a coronation,' he said in an interview. 'There has never been a reason to think this was going to be quick and easy.'"[15]

According to the Federal Election Commission, Keep the Promise II spent $634,173 in 2015, $500,000 to Cambridge Analytica, a privately held company that combines data mining, analysis, and strategic communications. The company is at least partially owned by Robert Mercer,[16] a major donor to conservative causes, including $11.5 million in contributions to the pro-Cruz super PAC Keep the Promise I.[17][18]

In its February 2016 FEC filing, Keep the Promise II reported another $70,000 expenditure to Cambridge Analytica.[19] The super PAC spent a little over $300,000 on "media production services" in February 2016.[20]

The inactivity of Keep the Promise II mystified and frustrated Cruz allies. CNN reported in May 2016 that Neugebauer had discussed the possibility of withdrawing his cash from the super PAC and that "officials in the other Keep the Promise groups are no longer banking on Neugebauer and planning budgets as if his money does not exist."[3] According to CNN, Neugebauer had been skeptical of large-scale negative advertising and even scrapped an ad campaign in South Carolina. On the possibility of withdrawing his money, Neugebauer said, "I sincerely put the money in, and I am sincerely actively looking for ways to invest the money, I always thought that was a long road, and my deal with Ted to White House was a $10 million donation." After being asked directly about whether he would withdraw the donation, Neugebauer responded, "What if Ted loses every state the next two weeks and the election's over? I'm in it until Ted is either the president of the United States -- or no longer viable."[3]

Personnel

Dathan Voelter, Treasurer and Custodian of Records

Contact Information

P.O. Box 92225
Austin, TX 78709

References

  1. ↑ Fredreka Schouten, First look: Ted Cruz allies launch new super PAC, USA Today, March 4, 2016.
  2. ↑ Federal Election Commission, Statement of Organization: Keep the Promise II, FEC filing, April 6, 2015.
  3. ↑ 3.0 3.1 3.2 Theodore Schleifer, Ted Cruz allies 'mystified' over super PAC sitting on $10 million, CNN, March 14, 2016.
  4. ↑ Patrick Svitek, Cruz Doesn't Take Chance to Bless Dump Trump Movement, Texas Weekly, June 23, 2016.
  5. ↑ Federal Election Commission, Itemized Receipts: Keep the Promise II, January 29, 2016.
  6. ↑ Million-Dollar Donors in the 2016 Presidential Race, The New York Times, updated February 9, 2016.
  7. ↑ Alan Rappeport, The Man Behind the $10 Million to a Ted Cruz 'Super PAC', The New York Times, July 31, 2015.
  8. ↑ Dave Mann, Lifestyles of the Corrupt and Elected, The Texas Observer, January 16, 2011.
  9. ↑ 9.0 9.1 Federal Election Commission, Schedule A (FEC Form 3X) Itemized Receipts, election committee filing, March 20, 2016.
  10. ↑ ACT NO. 22 OF JANUARY 17, 2012, AS AMENDED, Puerto Rico government document, January 17, 2012.
  11. ↑ Katherine Burton, Puerto Rico welcomes rich Americans yearning to breathe tax-free, Bloomberg Businessweek, June 27, 2014.
  12. ↑ Legal Information Institute, 26 U.S. Code § 933 - Income from sources within Puerto Rico, Cornell University Law School, accessed on April 6, 2016.
  13. ↑ Edward Kleinbard, Stop Letting the Rich Move to Puerto Rico as a Tax Haven, The New York Times, April 14, 2016.
  14. ↑ Federal Election Commission, April Monthly filing: Keep the Promise II, FEC filing, April 20, 2016.
  15. ↑ Rebecca Ballhaus, Key Cruz Backer Poised to Open Money Spigot, The Wall Street Journal, March 11, 2016.
  16. ↑ Kenneth P. Vogel and Tarini Parti, Cruz partners with donor's 'psychographic' firm, Politico, July 7, 2015.
  17. ↑ Federal Election Commission, Schedule A (FEC Form 3X) Itemized Receipts, FEC filing, July 31, 2015.
  18. ↑ Federal Election Commission, Schedule A (Form 3X) Itemized Receipts, FEC filing, March 20, 2016.
  19. ↑ Federal Election Commission, FEC Form 3X: Report of Receipts and Disbursements (Keep the Promise II), FEC filing, February 20, 2016.
  20. ↑ Federal Election Commission, March Monthly filing: Keep the Promise II, FEC filing, March 20, 2016.
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