04/30/2009 05:12 am ET Updated May 25, 2011

GOP Convention Arm Sued For Allegedly Bilking Firm Out Of $760,000

The Republican National Committee entity in charge of coordinating this past summer's convention in Minnesota is being accused by one of its vendors of failing to pay nearly $800,000 in expenses.

In a complaint filed in January 2009 [PDF, 3 Dog Consulting, Ltd., alleges that it was not paid roughly $760,000 for fundraising services it did for the Minneapolis/St. Paul 2008 Host Committee, the non-profit group tasked with overseeing the convention.

The suit remains unsettled to this date, with the host committee saying it has met all of its contractual obligations and 3 Dog insisting that the organization is trying to weasel out of its financial commitments.

On the surface, the dispute appears to be more a business matter than political. The committee has more than $5.4 million cash on hand, with slightly more than $1 million in debts owed, according to FEC reports. It could, if it wanted, pay off the money for which it is being sued.

"This is a run of the mill business dispute in terms of what is required under the contract," said John Knapp, the committee's lawyer. "We paid these fundraisers over $680,000 and don't believe they are owed the money they are claimed."

But there are some potentially far-reaching implications to the complaint. For starters, its executive director, Jeff Larson, is one of the GOP's key behind-the-scenes players. Beyond being tasked with raising money for the convention, he is a conservative campaign guru, and, most infamously, provided a cheap-rental apartment for former Sen. Norm Coleman and bought the pricey clothes used by Sarah Palin during the '08 campaign.

Moreover, while the host committee is legally a separate entity from the Republican National Committee, the clash over unpaid funds could persuade other major vendors to be more hesitant when working with the GOP and affiliated committees in the future. 3 Dog, after all, is not an obscure shop -- the firm has done work for Norm Coleman, among others, including fundraising activities for his recount election.

"At first I thought it was greed," said Alan Weinblatt, the lawyer representing 3 Dog, when asked to explain what happened. "But that doesn't explain it. Because what are they going to do with our money? So then I thought, what else could it be? Just reading the emails... there seems to have developed some antagonism between Mr. Larson and 3 Dog. I think he began to believe that he could do this without them. So he said, 'Why should I pay them a four percent commission?'"

3 Dog entered a contract with the host committee on May 29, 2007 to "solicit both cash and in-kind contributions" for the 2008 Host Committee from outside the state of Minnesota. Its work was to conclude once the Republican convention was done on September 8, 2008. According to the complaint: "As compensation for its fundraising and consulting services," the firm would receive a "retainer of fifteen thousand dollars, plus an additional amount equal to four percent of all donations and contributors that Defendant 2008 Host received from sources outside of the State of Minnesota."

According to the complaint, 3 Dog raised a total of $36,123,421 for the committee, meaning that it should have earned a $1,444,937 commission. But, as Weinblatt details, the firm stopped receiving payments about three weeks before the convention. They "didn't think much about it until the convention was over and they asked where is the rest of our payments," he said. "They were told, 'there ain't no more payments.'" The firm, the complaint asserts, ended up receiving $684,000 in commission, some $760,000 less than it believes it was entitled to.

Asked about the alleged missing money, Knapp said that 3 Dog had been paid in full. He added that the committee had not set aside any money to pay the firm if in fact it loses the lawsuit because "we don't believe we owe them money."