AUSTIN — Agriculture commissioner candidate Sid Miller invested nearly $100,000 of campaign funds in the stock market, then took personal ownership of some of the stocks when he left the Texas House to settle loans he’d made to his campaign.
Miller didn’t record the transfers in his final campaign finance reports after leaving office in early 2013. He said he followed state law and Texas Ethics Commission guidelines.
The commission acknowledged it is investigating a complaint about how Miller repaid himself with the campaign funds. Once out of office, politicians may disburse leftover money to other candidates, charities and others.
Miller is the former state representative for District 59, which includes Copperas Cove and Coryell County. He left office a year ago after he was defeated by J.D. Sheffield, a Gatesville doctor, in a Republican runoff election.
Miller said most of his contributors would applaud the use of the free market to grow his campaign’s finances.
“It’s kind of a free-market entrepreneurial capitalist thing,” he told The Dallas Morning News.
His foray in the stock market flashes light on a rare practice in campaign finance, where donated money can be gambled in complex markets and shuffled around with little policing.
Craig McDonald, director of Texans for Public Justice, a campaign finance watchdog group, said Miller’s stock maneuvers, and the practice of buying stock using campaign funds in general, raises ethical concerns. For one, the complexity of the stock market can shroud transparency.
“He’s hidden this transaction so deeply in the mud,” McDonald said. “How can you ever track this if he doesn’t record it step by step?”
McDonald also raised concerns over the value of the stock growing for Miller and not the campaign fund.
Miller strongly denied any profiting from the transaction. He said he still has some of the stocks, but they “aren’t worth much.” He did not specify which stocks he still holds.
“Once it’s not part of the campaign, it’s my personal funds to do with as I please,” said the farmer, rancher, nurseryman and rodeo champion.
Miller conceded the campaign could have sold the stocks and repaid the loans with the cash proceeds, but “then I’ve got to pay brokerage fees on each one of those stocks, which is money down the toilet. I would’ve had to pay taxes on some of them and that’s money down the toilet,” Miller said. “The wise, prudent financial thing to do is just apply them to the debt and just hang on to them.”
Miller is one of five Republican candidates in the March 4 primary for the agriculture commissioner job. Also running are Eric Opiela, J Allen Carnes, Tommy Merritt and Joe Cotten. On the Democratic side, Kinky Friedman, Hugh Asa Fitzsimons III and Jim Hogan are competing. Incumbent Todd Staples is leaving the post to run for lieutenant governor.
Miller’s campaign purchased stocks worth more than $97,000 in late 2008. Miller sold portions of the shares at different periods while in office and recorded the transactions in his campaign finance filings to the ethics commission.
Among the companies he invested in were American International Group and CitiGroup Inc., where the stock shares split by differing ratios.
Other shares, such as those from General Motors or Blackberry, lost all or much of their value.
When he closed out the account after losing his 2012 re-election bid in the GOP primary, Miller decided to settle debts owed to him in exchange for the stocks. Left in the balance was a $2,000 no-interest personal loan he’d given out to his campaign, and a second $10,000 loan he gave at 10 percent annual interest — amounting to a repayment of $31,000.
“Instead of selling the shares and writing myself a check, I took the value of those shares and applied it towards my personal loan. They weren’t sold. They were transferred,” Miller said.
The Dallas Morning News originally reported on the high-interest rate for the $10,000 loan in November. The article spurred Republican activist Mark McCaig to file a complaint with the Texas Ethics Commission, which said it is examining the legality of the loan. Miller called McCaig’s complaint frivolous and politically motivated.