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Facing a Democratic incumbent who is raising and spending more money in Pennsylvania's gubernatorial race, Republican Scott Wagner is making an unusual move with his campaign contributions.

He's investing some of them in the market — and political analysts are having trouble grasping why.

Newly released campaign finance reports show Gov. Tom Wolf largely out-spending and out-raising Scott Wagner, who has taken in half of the Democrat's haul since June.

The reports, released this week, also show Wagner — a York County businessman, like Wolf — has been investing "excess campaign funds" in a brokerage account. 

In April, Wagner reported receiving $1.5 million because of an "increase in value of excess funds" put into a brokerage account.

But sometimes the market worked against him.

In May, Wagner reported $1.4 million in expenditures because of a "decrease in value of excess campaign funds" put into the account, nearly zeroing out his initial gains from the investment.

Still, the investments made further gains, and as of this month, the brokerage account netted more than $840,000.

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The campaign itself also has been loaned nearly $1.4 million from the account since 2017.

Wagner campaign spokesman Andrew Romeo clarified all of the money invested into the account was from Wagner's own donations, but he didn't respond to follow-up inquiries about exactly how much money was invested.

Wagner has spent more than $8.2 million of his own money on the campaign, according to Vote Smart, a campaign watchdog organization, but the campaign finance report is unclear as to how much of that money was directed to the brokerage account.

The state's campaign finance laws state that as long as interest and dividends are “received in accordance with the applicable banking laws and in the ordinary course of business," investing funds is legal.

But the law says nothing about reporting how much money was put into a brokerage account.

Romeo applauded the strategy, which he sees as financial prowess.

"Scott has been able to invest and substantially grow money he has put into his own campaign by placing it in a brokerage account," he said. "The money managers in Harrisburg could probably learn a thing or two from the approach." 

However, some Pennsylvania political analysts have never heard of such a strategy and struggled to find a reasoning behind Wagner's investments.

Micah Sims, executive director of Common Cause Pennsylvania, a nonpartisan political watchdog organization, said in his more than 20 years in politics he's "never seen anything like this."

"This is probably a practice that many people, including myself, would totally frown upon," he said. "I don't understand why we're running political campaigns to make money. I thought that happened on Wall Street."

Sims added that although the practice may be within the boundaries of the state's campaign finance laws, Wagner's report illustrates the need for campaign finance law reform.

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"This is something that has raised a red flag," he said. "We are going to push upon and address this to fix campaign finance laws in Pennsylvania."

G. Terry Madonna, director of the Franklin & Marshall College Center for Politics and Public Affairs, agreed with Sims but floated his own idea of why Wagner is playing the market. 

"I've never heard of somebody in a campaign investing to raise money," Madonna said. "I think the real goal is to raise a lot of bucks quickly."

He pointed to the most recent campaign finance reports from each candidate, which show Wolf's campaign with roughly $8.9 million on hand compared to Wagner's  $1.8 million.

Wolf raised $7.2 million during the June-to-August quarter, and Wagner raised $3.6 million.

Wolf has also drastically out-spent Wagner, paying out more than $13.5 million since June — roughly $10 million of which was for advertising — compared to Wagner's $3.4 million total, of which about $1.4 million went to advertising.

In addition to Wagner's lagging finances, his campaign has nearly $6 million in unpaid debt and obligations. Wolf's report shows a zero balance.

Madonna said the investing may be a Wagner campaign strategy to help raise more money to close the gap, but he added investing it may not be the best strategy because that money can't be spent.

"This means you're not spending the money since you have it invested," Madonna said. "When you're being outspent the way he's being outspent, what's the point of that?"

Madonna said Wagner's priorities should lie elsewhere, such as increasing his presence in the state and getting more name recognition.

 

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