Keough’s Folly, Part 2: False loans on ethics reports suggest overpayments, possible tax evasion

Keough’s Folly, Part 2: False loans on ethics reports suggest overpayments, possible tax evasion

Image: Montgomery County Judge Mark Keough’s campaign finance reports display cavalier reporting methods in which he abuses loans to and for his campaigns. The misinformation contained in those reports seems to have acquired power by repetition in later report by which Keough sought to create an illusion of truth.

The Golden Hammer Staff Reports with Legislative Bureau Chief Ashley Burke

Conroe and Austin, January 25 – Montgomery County Judge Mark Keough has filed several false and misleading campaign finance reports in which he has failed to report loans accurately. Loans to political campaigns in Texas can become a particularly acute problem, because, if over-reported, they become a mechanism by which a candidate may withdraw campaign funds from his campaign account (1) illegally under the Texas Election Code and (2) without reporting the income under the United States Internal Revenue Code.

It is illegal to file false information in a campaign finance report. Section 254.041 of the Texas Election Code establishes that crime as a Class A misdemeanor. Keough already has a serious criminal record after pleading guilty to Driving While Intoxicated in April, 2021.

Similarly, under Section 61 of the United States Internal Revenue Code gross income means “all income from whatever source derived.” Gross income includes income from criminal activity, such as overreporting of loans in order to withdraw campaign funds illegally from a campaign contribution account. Many prominent criminals went to prison for tax evasion by failing to report the income from their crimes with Al Capone, Leona Helmsley, Pete Rose, Heidi Fleiss, and John Gotti. Readers shouldn’t anticipate a criminal prosecution of Keough, however, because, in Montgomery County, criminals don’t go into prison but instead they go into politics.

…in Montgomery County, criminals don’t go into prison but instead they go into politics.

Over-reporting loans on campaign finance reports then enables a politician to “pay himself back” through campaign contributions as though the payments were merely repayments of loans rather than improper diversions of campaign funds into his personal coffers.

The Keough story begins with two loans Keough claims to have made to his campaign for State Representative, $50,500 on November 21, 2013, and $20,000 on January 23, 2014, totaling $70,500.

In a July 15, 2014, filing with the Texas Ethics Commission (TEC), Keough reported the loan total as $90,500, with no explanation or reporting of how or where came the additional $20,000.
Between August and November, 2014, Keough reported partial repayment of the loans totaling $2,600. Carrying the misreporting from the previous filing forward, Keough reported his new loan total of $87,900, rather than the real total of $67,900.
The most extreme false report came in Keough’s January 15, 2016, filing with the TEC where he reported a repayment of the loan in the amount of $50,000.
January 15, 2016, Campaign Finance Report, Schedule I, showing $50,000 repayment of loan to himself.

Rather than showing the new loan total of $17,900 (the correct $67,900 – $50,000 = $17,900), Keough instead reported his outstanding loans on that January 15, 2016, TEC filing as $142,900.00, or a full $125,000.00 higher than the actual amount.

January 16, 2016, TEC filing in which Keough swore, under penalty of perjury, that his outstanding campaign loans were $142,900, instead of the actual $17,900.
On June 25, 2016, and June 27, 2016, Keough claims to have made two loans to his campaign totaling $205,000. At that point, his loan balance should have been $222,900.00, but Keough reported his loan balance as $292,900.00.
Page showing loan total and sworn affidavit, July 15, 2016, TEC filing by Keough.

On July 18, 2016, Keough filed an amended TEC report showing a loan total of $142,900.00, where $150,000.00 of loans disappeared without any explanation in the entire report.

July 18, 2016, TEC filing by Keough, where $150,000 of loans disappeared without any explanation.
On Keough’s January 15, 2018, TEC report, Keough reported two additional loans to his campaign in the amounts of $35,000 on December 27, 2017, and $55,000 on July 31, 2017, totaling $90,000 of additional loans. On that report, however, Keough showed his total outstanding loans as $232,900.00, thus carrying forward the false loan balances from the previous reports.
In 2017, then former State Representative Steve Toth informed Keough that Toth intended to run against Keough in the Republican Primary Election, because Keough had a moderate voting record and had seconded the nomination of liberal Speaker of the House Joe Strauss. Keough pivoted away from the Texas Legislature to run for Montgomery County Judge. He continued to carry over his incorrect loan amount of $142,900.
While running in the Republican Primary Election in 2018, Keough reported $232,900 as his outstanding loan amount on February 26, even though the only additional loans he’d made were two loans totaling $15,000.
On January 27, 2019, Keough claims to have repaid himself $70,000. His campaign finance report showed total outstanding loans of $177,900. On January 7, 2022, Keough amended that report to show an outstanding loan balance of $247,900 with no explanation, as though he had never repaid himself the $70,000.
On July 15, 2021, Keough reported that he repaid himself $50,000 of the outstanding loans but on December 17, 2021, he made a new loan to his campaign in the amount of $130,000.00. He reported total outstanding loans of 324,900.00 in his January 18, 2022, TEC filing. That number makes no sense whatsoever and raises serious questions whether many of these loans ever actually existed at all.
Keough did not respond to a request for comment or explanation.
Keough’s January 18, 2022, campaign finance report, page 2, showing sworn affidavit and claimed current loan total of $324,900.00.

 

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