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Politics
These fact checks of North Carolina politics are a collaboration between PolitiFact and WRAL. You can hear them Wednesdays on WFAE's Morning Edition.

Fact check: McCrory suggests Budd is using money owed to farmers for attack ads

Ted Budd and Pat McCrory
Twitter
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Ted Budd (left) and Pat McCrory are both lobbying for the Republican nomination for the North Carolina U.S. Senate seat open in 2022.

This week we look at claims made by former governor and current Republican U.S. Senate candidate Pat McCrory. Speaking on WBT radio last month, McCrory accused one of his opponents, Republican U.S. Rep. Ted Budd, of "ripping off farmers." McCrory also suggested Budd used money that was owed to farmers to pay for attack ads criticizing him. To assess whether or not that's true, WFAE's "Morning Edition" host Marshall Terry talks with Paul Specht of WRAL.

Marshall Terry: Paul, there's quite a bit to unpack here, so let's start with the basics. What is McCrory referring to when he claimed Budd used money owed to farmers to pay for attack ads?

Paul Specht: Years ago, the Budd family was involved in a seed company, and that company was called AgriBio Tech, And Budd's dad, Richard, eventually took the helm at this company. Well, it was in bad shape when he took over. And so Richard Budd, Ted Budd's father, got a loan for $10 million, loaned it to the company, AgriBio Tech. That loan did not save the company. The company filed for bankruptcy. But before it did, the company paid back Budd's family's loan.

Now, some people say, Hey, that money should have been used to pay farmers who had given their seed to the company for distribution and sales. That did not happen. If people go and read the story, The Washington Post has a big detailed story about this, they'll see that a lot of farmers were not paid for their work. So that's the controversy here. Budd's dad was at this company. He loaned it $10 million before it went bankrupt. The company paid his loan back. But then some farmers were not paid appropriately for their work.

Pat McCrory ad
Club for Growth
A screenshot from an ad against former Gov. Pat McCrory, paid for by Club for Growth.

Now it's fair for McCrory or anyone to point out, Hey, you know, maybe that loan repayment shouldn't have happened. Or, farmers should have gotten paid first. That's all fair. But what McCrory did here was go a step further and say, Hey, some of that money that the Budd family was paid from the company has trickled down and is now being used against me. And that's where we are here.

Terry: OK, so is McCrory right about that?

Specht: We reached out to McCrory and his campaign and they pointed to donations from Budd's father and Budd's brother to Club for Growth Action. Club for Growth is a big conservative group and political action committee. They tend to endorse candidates, almost always on the Republican side. And so McCrory's campaign pointed out, Hey, Richard and Joe Budd have donated to Club for Growth.

Well, here's the problem: the donations that McCrory's campaign pointed out happened in 2016 and 2018. Budd was not running for Senate in those years. He was running for Congress. We found it very, very unlikely that those donations from 2016 and 2018 to Club for Growth would be used against McCrory in attack ads in 2021. That just doesn't seem likely.

And you might ask, why is it so unlikely? Because Club for Growth is running attack ads against McCrory. They support Ted Budd. Well, Club for Growth announced earlier this summer that they had raised $5 million just to support Budd's Senate campaign. So they don't exactly have to go digging through their couch cushions to find those old Budd family donations.
Terry: What has Budd said about all this?

Specht: Budd hasn't said too much. He and his father were both interviewed by The Washington Post. They didn't speak with us about this, and they clarified this was not something where they made money. Richard Budd took out a loan from a bank to loan to this company back in the day. And then when it was paid back, the family claims they had to repay the bank because it was a bridge loan. And so they say, Look, they didn't make money on this. Ted Budd's spokesman said, You know, he lost his stock when the company tanked. They sort of believe this whole story is being blown out of proportion. And speaking with the Budd campaign, there were sort of surprised to hear McCrory say that money from this AgriBio Tech settlement years ago would be somehow involved in the Senate race today.

Terry: And is it true what the Budd campaign spokesman said that the Budd family did not make any money off of this?

Specht: It seems highly unlikely. And here's why: when Richard Budd got that $10 million loan and gave it to the company he had to take out a loan with the bank. When the company paid Richard Budd back, the family claims that he had to then repay the bank. And then years later, as this went to court, as farmers said that they should have been paid, the Budd family did agree to settle out of court and pay back $6 million. So if we're keeping track and doing this math here, they loaned $10 million. They got $10 million back. Years later, they agreed to pay back $6 million. Just in a vacuum here, they would be out $6 million.

Now it's certainly possible that somewhere throughout all these years, they could have invested that money, or maybe they didn't pay the bank back. I don't know. I'm going by what they say. I can only report what is told to me. In fact-checking, what we do is we ask the person making the claim, "prove what you say." The burden of proof is on the person who spoke. And so we asked McCrory, Can you prove to us that the Budd family made money on this deal, this loan repayment, and then used that specific money on attack ads against McCrory? And they could not do that.

Terry: So how did you rate these claims by Pat McCrory?

Specht: We rated them "mostly false." Now let's go through again what he said. He said the family made money from the company repaying their $10 million loan. McCrory does not have proof that they made money. It's hypothetically possible that when the family got the $10 million loan repaid from the company, they could have invested it and made that money grow and things like that. But the family says it had to repay the bank and then years later, through a settlement, they had to give back $6 million. So McCrory's claim that the family made money certainly seems like a stretch.

Now, the second part of that claim is that the money they made is being given to a "special interest group," in his words, that is attacking him. It's true that Richard and Joe Budd, Ted Budd's father and brother, did donate money to Club for Growth, and sure, that's a special interest group, you could say. But they donated a total of $70,000 in 2016 and 2018, and McCrory is suggesting that that money donated more than three years ago is somehow being used to pay for ads against him in 2021. We don't see that connection, especially since Club for Growth announced earlier this summer that they've raised $5 million just to spend on Ted Budd's Senate campaign.

So it's very highly unlikely that that money that started with an AgriBio Tech loan repayment years ago somehow ended up in the Club for Growth's Senate campaign fund in 2021 to be used against McCrory. We just don't see proof of that.

Terry: All right, Paul, thank you.

Specht: Thank you.

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