Republican presidential candidate Ted Cruz at a Republican Party reception in Durango, Iowa. (AP Photo/Telegraph Herald, Nicki Kohl)
A Texas billionaire who moved his residence to Puerto Rico after its island government carved out a lucrative new tax haven for wealthy U.S. investors is a prime fundraiser for a network of super-PACs backing Texas Sen. Ted Cruz for president, according to sources close to Cruz’s campaign.
Toby Neugebauer, the co-founder of Quantum Energy Partners, a Houston-based private equity firm, and the son of a Texas congressman, is playing a key role as donor and fundraiser for an unusual super-PAC arrangement that grabbed attention in political circles this week for raking in $31 million within a few days of being formed — an unprecedented haul for a new presidential candidate, the sources said.
In papers filed with the Federal Election Commission early this week, and first reported by Bloomberg, four separate super-PACs — all with variations on the name “Keep the Promise” — were registered to back Cruz’s candidacy. “The PACs will operate as a single team with one ultimate goal,” Dathan Voelter, an Austin lawyer who registered three of the committees and listed himself as their treasurer, told Yahoo News in an email.
So far, little is known about who is behind the super-PACs, and Voelter declined to discuss the identities of any donors, noting that the committees are not required to make any disclosures until mid-July.
But sources familiar with the arrangement identified two key players, both with close ties to Cruz. One is David Panton, an Atlanta-based private equity manager who was Cruz’s college roommate at Princeton, his classmate at Harvard Law School and later his business partner in a Caribbean holding company registered in the British Virgin Islands and operating out of Kingston, Jamaica.
The equity firm, called Caribbean Equity Partners, received scrutiny two years ago when Time reported that Cruz had initially failed to report his ties to the company on his financial disclosure form while running for the Senate in 2012.
Cruz, who had served as a director of the company when it was formed in 2002 and invested $6,000, called that an “inadvertent” omission and later twice amended his financial disclosure forms to report that he still holds a promissory note from Panton’s firm he valued at $100,000 to $250,000. (Cruz’s most recent financial disclosure, filed in 2013, values the promissory note from Panton’s company at $75,000 “plus reasonable rates of interest.” A Cruz spokesman did not respond to questions from Yahoo News on whether the senator had in recent years received payments from the Panton firm that reduced the value of the promissory note.)
According to sources close to Cruz’s campaign, Panton is effectively running the super-PACs. He has shown up at initial fundraisers hosted by Cruz in order to tap wealthy donors who “max out” giving to the Texas senator’s official presidential campaign committee, one source said. (Under federal campaign laws, donors are permitted to give a maximum of $2,700 to campaign committees but can give unlimited amounts to theoretically “independent” super-PACs.)
Panton did not respond to a request for comment. But in an interview with the Jamaica Business Observer this week, he described himself as “an active supporter” of Cruz’s super-PACs.
“I speak with and see Ted frequently as a close friend, but deliberately do not discuss his campaign strategy,” Panton told the paper, saying that because of his super-PAC role, “I am not able” to have such talks.
Neugebauer, the son of Texas GOP Rep. Randy Neugebauer, is playing a more behind-the-scenes role, focusing on raking in funds from high-value donors in Texas energy circles. Last September, Neugebauer made available his East Texas ranch — complete with a nine-hole golf course and shooting ranges — for a Cruz gathering with top Texas donors, an event that was seen at the time as a strong sign of the senator’s plans to run for president.
Texas GOP Rep. Randy Neugebauer (Reuters/Jason Reed)
In recent conversations with potential donors, Cruz has described Neugebauer (who had been a major contributor to former Texas Gov. Rick Perry, another potential 2016 candidate) as a key moneyman in the super-PACs, the sources said.
But Neugebauer’s role has also gotten attention in Texas political circles in part because of a report last year by Bloomberg that he was among 200 “traders, private equity moguls and entrepreneurs” who had moved their residences to Puerto Rico following enactment of a new law that wiped out all federal capital-gains taxes for island residents. (Under the law, Puerto Rico requires that residents spend at least 183 days a year on the island.)
Neugebauer, who transferred his residence to Puerto Rico in March 2013, was quoted in the article as citing the chance for his sons to learn Spanish and better investment opportunities as his reasons for moving to the island.
“I wouldn’t have moved for the taxes, but it is an interesting proposition,” Neugebauer told Bloomberg at the time. He did not respond to a request for comment from Yahoo News.
The name of one other wealthy GOP donor has already surfaced as a key figure in the super-PAC arrangement: New York hedge fund mogul Robert Mercer. The link was quickly made because, while Austin lawyer Voelter registered three of the super-PACs, the fourth was registered by a Port Jefferson, N.Y., accountant who also serves as the accountant for Mercer’s family foundation.
In explaining the arrangement of four super-PACs, Voelter said in his email to Yahoo News that “the Keep the Promise family of committees permits certain donors a degree of control and influence over the expenditure of their funds not available in traditional stand alone PACS.”