Candidates decline to refund cash from pair charged by SEC

Fraud and insider trading charges against two Texas billionaires have created a political snag for the GOP.

Samuel and Charles Wyly, brothers who founded Sterling Software and sold it for nearly $4 billion in 2000, have contributed hundreds of thousands of dollars to Republican candidates in recent years.

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The Securities and Exchange Commission has charged them with running a stock fraud scheme that earned $550 million.

The SEC also accused the brothers of reaping $32 million from insider trading.

Former Sen. Dan CoatsDaniel (Dan) Ray Coats10 declassified Russia collusion revelations that could rock Washington this fall 11 Essential reads you missed this week Trump crosses new line with Omar, Tlaib, Israel move MORE (R), who is running for Senate in Indiana, and Sen. Richard BurrRichard Mauze BurrHoekstra emerges as favorite for top intelligence post Trump casts uncertainty over top intelligence role Trump withdraws Ratcliffe as Intelligence pick MORE (R), who is seeking re-election in North Carolina, are two candidates who have taken money from the Wylies.

Democrats pounced on the allegations and called on Republicans to refund the money or give it to charity.

The fraud charges present a tricky problem for the congressional Republican political committees that have blasted Democratic candidates for accepting money from scandal-tainted Rep. Charlie Rangel (D-N.Y.).

A Democratic campaign spokesman called on the National Republican Congressional Committee (NRCC) to refund more than $150,000 given by the Wylies.

“NRCC Chairman Pete Sessions’ choice is simple: stand up for what’s right by returning this tainted campaign cash or let the Wyly’s dirty money continue helping House Republicans, even though it came from a massive fraud of American taxpayers using foreign bank accounts,” said Ryan Rudominer of the Democratic Congressional Campaign Committee.

Rudominer said Sessions’ actions would show voters whether Republicans are “more concerned about funding their campaigns or about refunding money defrauded from American taxpayers using foreign bank accounts.”

Samuel Wyly has given $106,000 to the NRCC over the years while Charles has given $44,500, according to the Center for Responsive Politics, a nonpartisan research organization that tracks campaign spending.

The brothers have also given over $100,000 each to the National Republican Senatorial Committee, according to CRP.

NRSC Chairman John CornynJohn CornynThe Hill's Morning Report - Trump hews to NRA on guns and eyes lower taxes The Hill's Morning Report - Trump on defense over economic jitters Democrats keen to take on Cornyn despite formidable challenges MORE (R-Texas) took $12,000 from the family.

Republican candidates have tried to distance themselves from the Wylies by arguing that their contributions came in previous election cycles.

Samantha Smith, a spokeswoman for Burr, said the $4,000 he accepted from Charles and Dee Wyly in 2004 was spent in that election cycle.

“It’s money that was spent in 2004,” she said. “If Democrats are asking for us to return the money, it’s already gone.”

Smith said if Burr’s opponent Elaine Marshall wants to make an issue out of the contributions she should return money she received from state lobbyists, whom she regulates as secretary of state.

Pete Seat, a spokesman for Coats, said the $1,250 that Charles Wyly gave his boss between 1992 and 1995 is long gone.

“When Dan stepped down under a term limits pledge in 1999, the campaign account was shut down,” said Seat.

The leftover funds in the account were donated to the Foundation for American Renewal, a section 501(c)3 nonprofit foundation Coats and his wife founded. The group promotes “faith in God, liberty and compassionate entrepreneurship,” according to its website.

The issue may not be easy for Republicans to dodge because they have pummeled Democratic candidates for taking money from Rangel, who is facing 13 counts of ethics violations. They have slammed candidates such as Rep. Brad Ellsworth (D), who is running for Senate in Indiana, for having taken the money in previous election cycles.

Under heavy GOP pressure, Ellsworth pledged earlier this month to give $12,000 in campaign contributions he received from Rangel between 2005 and 2007 to Indiana charities. He did not receive any money from Rangel for his 2010 Senate race.

Republicans have also pounded on Rep. Paul Hodes (D), a candidate for Senate in New Hampshire, to return $17,000 he accepted from Rangel between September 2006 and March 2008.

“Although Paul Hodes is now trying to walk away from his close relationship with Rangel, he continues to sit on more than $17,000 in campaign contributions he has received from the ethically tarnished New York congressman,” charged a recent press release from Republican Senate candidate Kelly AyotteKelly Ann AyotteTrump makes rare trip to Clinton state, hoping to win back New Hampshire Key endorsements: A who's who in early states Sinema, Gallagher fastest lawmakers in charity race MORE.

Tainted campaign cash has emerged as theme of the 2010 midterm elections with both sides lobbing grenades back and forth at each other.

Republicans have said that the Democratic Senatorial Campaign Committee should refund or donate to charity the $100,000 it has collected over the years from convicted embezzler Bernie Madoff.

Madoff was sentenced to 150 years in prison for running a Ponzi scheme costing more than $60 billion.

The DSCC and the NRCC have also declined to refund more than a million dollars worth of contributions from jailed Texas businessman R. Allen Stanford, according to the Associated Press.

Stanford has been charged with running a $7 billion Ponzi scheme.