published Thursday, January 10th, 2013

Chattanooga-based Internet payday lender accused of improper donations

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    Carey V . Brown owns several internet payday lending sites.

A watchdog group claims a Chattanooga-based Internet payday lender and philanthropist may have violated federal law by funneling a $1 million donation through his long-time associate.

"There are only a handful of donors in the country who are literally writing $1 million checks," said Melanie Sloan, executive director for the Washington D.C.-based Citizens for Responsibility and Ethics.

Complaints filed with the Federal Election Commission and Federal Bureau of Investigation state Carey V. Brown, who owns or controls a number of companies involved in an online payday enterprise, bankrolled the entire budget of a Pennsylvania-based super PAC through his associate, Sherry Huff.

Brown, in an email, denied that he had anything to do with the donations.

"Sherry is a lady with substantial means," Brown wrote. "So what, if she chooses to live below her means?"

Republican Union PAC, which declined to disclose its donors when it was founded in August 2012, spent a total of $950,000 to pay for billboards in Florida, Michigan, Ohio, Pennsylvania and Virginia that attacked President Barrack Obama for supporting same-sex marriage.

Recent FEC filings reveal just two donors: Huff, who wrote a $1 million check, and a man from California who gave $500.

"While you'll often see smaller improper donations, you don't often see checks in this amount that seem illegal, because checks of $1 million draw attention," Sloan said. "This is a really big problem."

Huff did not respond to a request for comment. In an email to the Washington Post, Huff said the contribution came from her. “I didn’t like the way the election was looking,” Huff wrote in an e-mail message to The Washington Post. “Desperate times call for desperate measures.” Huff said her house, although modest, “is VERY nice and I lack for nothing.”

David Hutton, an attorney for Scenic City Legal Group who represents Brown's companies, said the money that Huff gave to Republican Union was her own.

"Carey Brown did not funnel the money through Sherry Huff," Hutton said.

Brown has employed Huff as his bookkeeper for many years, dating back to their days working together at a Rossville-based used car dealership named Happy Motors.

Huff, Brown said in a 2005 deposition, "handles the money" for a group of what he called shell corporations.

However, Huff never before has made a recorded political donation, and her assets consist of two small homes that combined are worth $176,000, the complaint states. Brown, on the other hand, has given tens of thousands of dollars to a who's who of conservative Republicans throughout the Chattanooga area, according to Federal Election Commission records.

"Usually, you work yourself up to $1 million, because nobody even knows to solicit you for $1 million until you've made several big donations," Sloan said. "How would they even know to ask her for the money?"

Brown has pledged publicly to give away $1 billion through his Covenant Values Foundation.

"Between a bookkeeper with no previous history of campaign donations and an extremely wealthy long-time Republican donor, who is more likely to make a $1 million political contribution: the bookkeeper or the billionaire?" Sloan asked.

If CREW's allegations are true, the donation could violate federal regulations that prohibit making a contribution in the name of another person, or knowingly permitting one's name to be used to effect a contribution in the name of another person, according to the FEC. It's called being a "straw donor."

Any person who violates that law is subject to up to five years in prison and fines, the law states.

"The FEC can be expected to look at her bank accounts," Sloan said. "If this is what it looks like, it will come out."

The Republican Union PAC did not respond to requests for comment.

A message to Colorado Springs-based Patrick Davis, who was listed as the administrator of the group's Facebook page, was not returned.

Sloan said it's likely that PAC officials knew exactly where the money came from and may have been complicit in the arrangement.

"As much as it strains credulity that the first-ever political contribution by a woman of relatively modest means would be for a million dollars, it is equally hard to believe a super PAC with no other donors wouldn't know where the money came from," Sloan said.

CREW based its research on Federal Elections Commission filings, Catoosa County property records and stories published by the Chattanooga Times Free Press. The newspaper's stories revealed links among a number of Brown's companies, such as Terenine, ACH Federal and Area203.

about Ellis Smith...

Ellis Smith joined the Chattanooga Times Free Press in January 2010 as a business reporter. His beat includes the flooring industry, Chattem, Unum, Krystal, the automobile market, real estate and technology. Ellis is from Marietta, Ga., and has a bachelor’s degree in mass communication at the University of West Georgia. He previously worked at UTV-13 News, Carrollton, Ga., as a producer; at the The West Georgian, Carrollton, Ga., as editor; and at the Times-Georgian, Carrollton, ...

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