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Texas Observer
Texas Observer
Justin Miller

Is Ted Cruz’s Podcast PAC Payoff Scheme Illegal?

U.S. Senator Ted Cruz is facing yet another complaint to the Federal Elections Commission that claims he has “brazenly” violated federal campaign finance laws through his podcast deal with one of the nation’s largest media conglomerates. 

Cruz struck a deal in 2022 with San Antonio-based radio giant iHeartMedia to pay for the production, marketing, and distribution of his “Verdict” podcast, where he pontificates about various right-wing grievances several times a week. The sweetheart arrangement has raised myriad ethics concerns ever since. 

The complaint, filed Tuesday, comes amid revelations that iHeartMedia has sent over $630,000 to a super PAC backing Cruz’s 2024 reelection campaign over the past year. That’s about a third of the PAC’s total cash haul. 

The company has told reporters that these payments were for “digital revenue” from the podcast’s advertising sales, while referring further questions to Cruz and the super PAC. Neither the senator, nor his affiliated super PAC, Truth & Courage PAC, have provided any further details. 

But Campaign Legal Center and End Citizens United allege in their complaint that Cruz “requested or directed” iHeartMedia to pay the PAC in violation of federal election laws that prohibit candidates from raising, directing, or spending “soft money” that exceeds contribution limits and from coordinating directly with outside super PACs. 

Campaign Legal Center, a Washington-based campaign finance watchdog, has persistently bird-dogged Cruz over a series of potential ethics, campaign finance, and election law violations. End Citizens United is a Democratic PAC that supports campaign finance reform and aligned candidates; the group has endorsed Cruz’s Democratic opponent Colin Allred. 

“The terms of iHeartMedia’s podcast agreement with Cruz are not public, and the company’s recent comments do not explain why it is sending money derived from ad sales associated with Cruz’s podcast to a super PAC supporting Cruz’s 2024 reelection campaign,” the complaint states.  “The most reasonable and logical inference to be drawn from these circumstances, however, is that Cruz requested or directed, and iHeartMedia agreed, that iHeartMedia would transmit these funds to TCP, which then would use the funds to support Cruz’s candidacy.”

The Campaign Legal Center previously prompted the Senate Ethics Committee to investigate whether Cruz violated Senate ethics rules that prohibit taking gifts from a registered lobbyist or accepting honoraria for event appearances or speeches. That investigation was ultimately closed after both Cruz and iHeartMedia said the senator personally makes no money through the deal and volunteers his time to host episodes several times a week. 

Cruz and Truth & Courage PAC have ducked questions about who directed iHeartMedia to send money to the super PAC. Pressed by a reporter in a recent TV news interview, Cruz attacked the media for “parroting” left-wing Democratic attacks and pointed to the prior Senate Ethics Committee’s investigation that found no wrongdoing. That probe, however, did not involve the company’s payments to the Cruz-aligned super PAC. 

Cruz claims he does the podcast as a service to the public by pulling back the curtain on corruption in Washington. “Because the media doesn’t report on news, and I do the podcast to talk to the people of Texas about the issues that matter,” Cruz said. 

The Texas senator—a key player in conservatives’ pursuit of unlimited, unregulated money in federal politics—is no naif on these matters and, in fact, has earned a reputation as a “blatantly cynical” FEC troll who methodically seeks to exploit loopholes in the gray areas of federal election law. In his 2018 Senate campaign, he successfully challenged federal regulations that restrict how much of candidates’ personal loans to their campaigns can be repaid by donors. He has also been accused of blatantly testing (or outright violating) laws that prohibit super PAC coordination and using campaign funds for personal use or gain. In 2021, he was accused of executing an illegal scheme to funnel campaign cash through a shadow entity to buy copies of his latest book. 

Cruz may be likely trying to game the system again with his podcast deal. As the Daily Beast reported, some campaign finance experts say Cruz is technically not “raising” money for the super PAC but instead “earning” money for it—and PACs aren’t prohibited by law from making outside revenue. What’s unique about the iHeart podcast arrangement, the report says, is that it “raises a prospect entirely unique to Cruz: that a super PAC can essentially moonlight as a media company.” 

“What seems to be going on here is he’s treating this political group not through the standard fundraising that it would do, but instead, basically treating it as business, and that it’s making money off of his podcast, as if it were just making money off of selling T-shirts,” one campaign finance watchdog told the Daily Beast

Whether Cruz violated federal election laws depends largely on details that remain unknown—including who the actual parties in the podcast contract are and what role Cruz played in directing payment to the PAC.

The complaint asks the FEC to investigate specifics of the podcast deal and PAC payments. The federal agency, however, has long been mired in political dysfunction and discord that effectively make it incapable of policing even the most basic tenets of election law. 

 “The odds of the FEC sanctioning him for this are astronomically low,” Brett Kappel, a campaign finance attorney at a Washington law firm, told the Daily Beast, noting that one of the Republican commissioners appointed by Trump was previously Cruz’s chief counsel in the Senate. 

Cruz’s podcast deal has also raised concerns of undue influence that go beyond the super PAC payments: iHeartMedia, which owns hundreds of radio stations across the country, spends millions of dollars lobbying lawmakers each year on a range of issues including policies under the jurisdiction of the Senate Commerce Committee—on which Cruz serves as the ranking Republican member.  Cruz has also received tens of thousands of dollars in campaign contributions from lobbyists who represent iHeartMedia, the Daily Beast found. 

Two months after iHeartMedia began sending payments to the Truth & Courage PAC last year, Cruz announced he was sponsoring a bill that would prohibit automakers from removing AM radio from certain cars. iHeartRadio owns over 250 AM radio stations.

While trying to pass his bill on the Senate floor last year, Cruz praised AM radio as an “oasis for conservative speech,” citing influential talk show hosts like Rush Limbaugh and Mark Levin. Their dominance of those airwaves helped give rise to Cruz’s career—first as a politician, now as a podcaster.

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