Inside the abandoned plans of Ted Cruz's super PACs

Cruz: I tried to rescue my sister from a crack house
Cruz: I tried to rescue my sister from a crack house


    Cruz: I tried to rescue my sister from a crack house


Cruz: I tried to rescue my sister from a crack house 08:40

Story highlights

  • Keep the Promise II has not reserved any television time and has no plans to air advertisements until March or April
  • The Keep the Promise groups have raised over $38 million
  • Dropped plans to run 9,600 60-second biographical spots in South Carolina

Washington (CNN)Ted Cruz enjoys millions of dollars in super PAC money but he may have to wait until after the first round of primaries before he can reap the benefits of that unlimited cash.

The Keep the Promise set -- four super PACs which have collected more than $38 million to independently support Cruz's surging bid -- is struggling to show signs of life that can satisfy budding external pressure from both the official campaign and other Cruz allies.
    Keep the Promise II, the group funded with $10 million from Houston investor Toby Neugebauer, has not reserved any television time and has no plans to air advertisements until March or April, according to a leader of the super PACs, who requested anonymity to outline internal thinking in detail.
    The group was intended to be the main super PAC that purchased television spots, while the other two groups focused on radio and digital advertising. But right after Neugebauer, a controversial figure in some Cruz circles, delivered a PowerPoint presentation to Cruz donors during an exclusive campaign retreat at The Broadmoor resort this summer in Colorado, he abruptly pulled back on a planned major television campaign.
    The buy, which would have been for a substantial series of 9,600 60-second biographical spots, or a biopic, across South Carolina, a critical stop coming as the first southern state after the Iowa caucuses and New Hampshire primary. The source said the sudden decision came after a non-profit affiliated with Marco Rubio's campaign made its own purchase, jacking up television rates statewide. Other sources dispute that, saying the abandoned TV campaign was scuttled by legal questions about the perception of coordinating with the campaign.
    The super PACs are staffed in part by a few individuals with no formal political experience, including Neugebauer, who has been the groups' main fundraiser and formerly its chief executive officer -- in addition to one of its lead donors. The groups have only recently begun hiring their first political professionals, including a new professional fundraiser: Campbell Smith, a finance official at the National Rifle Association, the super PACs confirmed to CNN.
    The ditched buy is at the heart of the dispute between the campaign and the super PAC -- a dispute that spilled out into the public this week, with several campaign advisers telling Politico that they want to see Keep the Promise purchase advertising time immediately. Campaigns and super PACs frequently read one another's messages in the press with a fine-toothed comb to learn thinking that they cannot legally directly share with one another.
    It's a reflection of the divided campaign finance world, where super PACs are allowed to raise unlimited amounts of cash (donations must still be reported to the Federal Election Commission), but the catch is that campaign and super PAC officials aren't allowed to coordinate. Neugebauer's pitch at The Broadmoor came without Cruz staffers in the room, for instance, a donor said.
    And amid increasing questions about the super PAC, campaign officials are coming to the defense of Neugebauer, who left his role at the super PAC in a shake-up, and are praising his ability to incentivize two more eight-digit donations with a $10 million check of his own.
    "He is an extraordinarily talented leader -- a hugely successful businessman, a mega-fundraiser and a proven political visionary," said Chad Sweet, the Cruz campaign chairman, who added that the campaign was "grateful for what we see him doing from afar."
    "He has already demonstrated that he knows exactly what to do and when to do it."
    Cruz himself expressed his support. "Toby is a close friend and someone I admire and respect greatly," he said in a brief interview outside the Senate chamber this week.
    Neugebauer declined to comment through a super PAC spokeswoman, Laura Barnett. But his group is now closely monitoring available inventories before making its first buy, using the talents of a volunteer with a background in high frequency trading to analyze when it can earn the best rate, according to the super PAC source. The group has no plans to be up this year, ideally preserving its cash until March or April when other allied groups have depleted their budgets.

    Keep the Promise IV?

    Meanwhile, Cruz continues to attract deep-pocketed backers. His campaign and super PACs have executed list swap agreements, and Cruz continues to be one of the few favorites of most of the major fund-raising circles: the Republican Jewish Coalition, the Club for Growth, and the Koch Brothers' political network.
    One of those Koch donors, Darwin Deason, may soon create another Cruz super PAC, potentially Keep the Promise IV, pending a final donation from the family, CNN has learned. Deason gave $5 million to a similarly personalized super PAC supporting Rick Perry earlier this summer and recently committed to Cruz. Deason's son, Doug, did not respond to requests for comment.
    Cruz has praised his campaign for its cheapness, saying its low spending positioned it to have more cash on hand at the beginning of October than any other Republican campaign. And despite not having spent nearly any money on paid media, Cruz now sits in the top four in national polling -- on top of candidates such as Jeb Bush, whose super PACs have spent millions of dollars that hasn't translated to increased support. That's another reason why super PAC officials have been reluctant to pull the trigger: there's no need, at this point, they say.
    But given emerging calls from Cruz headquarters for the super PACs to begin making purchases, the South Carolina buy seems to be a commitment the campaign maybe wishes had been made.
    "For someone like Cruz who spends a lot of time in Iowa, it's not all that unusual for them to spend less on TV and then to be saving money for later states," said Carl Forti, a top unaligned super PAC operative who produced television to support Mitt Romney in 2012. "Looking at super PACs as a whole, I'm not sure there's anything traditional this cycle -- so this fits right in."

    Why drop the ad?

    It remains unclear why the group, at one point, discarded its plans. The defense of Neugebauer's group does not square with advertising records, which show that the Rubio non-profit group, Conservative Solutions Project, only made a big advertising purchase in South Carolina in the third quarter. It did reserve millions of dollars in spots around the time of the retreat at The Broadmoor, but those advertisements were to air in the opening months of 2016, not this fall.
    But the source who disagreed cautioned that there may be another reason why the Neugebauer plan was abandoned: The campaign's uploading of hours of unedited B-roll footage to a little-known YouTube account, which was discovered by BuzzFeed. After filming Cruz events and splicing the video with footage from the YouTube account, lawyers got skittish over what is ordinarily a common practice for outside groups: Would it appear that the super PAC was coordinating with the campaign by launching TV ads so soon after the YouTube upload?
    Texas-based Landtroop Strategies, a media buying firm which has previously worked with Neugebauer, was involved in negotiations with at least one TV station -- WSPA in Spartanburg, South Carolina -- and asked for "pre-emptible rates as long as they will fly (understanding we may have to adjust as more candidates/PACs weigh in)," according to a July 6 email obtained by CNN.
    "That did never come to fruition. It kept being pushed down the road and pushed down the road," said Pam Keyser-Baker, the station's sales manager, who estimated the scuttled three-month buy was worth $120,000 and disputed the idea that Rubio's group made the Cruz rate jump wildly.
    The super PAC did pay a fee to both the media buying firm and the creators of the spots, Revolution Pictures, according to a super PAC leader.
    Neugebauer, the son of Rep. Randy Neugebauer, is close with both Cruz and his wife Heidi, but has no formal political experience. Before the campaign launch, Neugebauer -- described by associates as hard-charging and at times abrasive -- was tasked with raising money for the groups, and while he has no formal role, sources say he directs the operation more broadly from behind the scenes.
    "He's a hyper-fast moving type of guy," said Saul Anuzis, a Republican strategist working for the campaign in Michigan. "When he sits across from you and says, 'I'm making a commitment and I'm asking you to make a commitment,' -- he's not benefiting from it financially or politically in any way -- I think that's a pretty powerful selling tool to have.'

    Keep the Promises

    This summer, Neugebauer stepped back from day-to-day operations and was replaced primarily by David Barton, a Texas operative with deep ties to the nation's pastors. One major super PAC donor, Tom Patrick, said he hadn't heard from Neugebauer in months.
    Like Barton, the three groups tied to the three anchor families all have religious tones.
    Keep the Promise III, backed solely by $15 million from Texas fracking giants Farris and Dan Wilks, is breaking through in digital organizing via its Reigniting the Promise project, with a months-old Facebook page that has quickly earned more than 350,000 likes.
    That group is advised by Jon Francis, a Wilks family member and the manager of their philanthropic giving, along with a coterie of anti-abortion activists from a group called Online for Life, who have no prior experience in partisan politics.
    Keep the Promise I, funded by Long Island billionaire Robert Mercer and helmed by Kellyanne Conway, a well-regarded GOP political operative, is focusing a $1 million radio campaign on Christian channels in Iowa, where Cruz is increasingly polling well.
    The $11 million group is also diversifying its portfolio and hiring organizers in the states. Jeff King, an Iowa political operative and son of powerful Rep. Steve King, is leading a growing field team in the Hawkeye State, and there are plans to staff up in South Carolina as well to supplement the official campaign field team -- which it's bumping into on the trail.
    "There will probably be a little overlap that we don't know about. But it's probably better to have too much than not enough," said King. "With the Iowa caucus, we know the model to be successful isn't necessarily running a thousand points a week for three weeks on TV."