A Fake Loan Could Mean Real Trouble for George Santos

Of all of the revelations to emerge from the federal prosecution of Representative George Santos’s treasurer, the most outrageous is the existence of a $500,000 loan that did not in fact exist.

The fictional loan goes to the heart of one of the most vexing questions surrounding Mr. Santos since he was elected to Congress last year: How did a man of seemingly modest means suddenly accrue enough money to lend his campaign a half-million dollars?

The answer, it turns out, is simple: He did not. And that fact could have serious ramifications for his case.

In May, Mr. Santos, a New York Republican, was charged with 13 felonies in three unrelated financial schemes, to which he has pleaded not guilty. On Thursday, his campaign treasurer, Nancy Marks, pleaded guilty to one count of conspiracy related to her oversight of Mr. Santos’s finances.

It is clear that prosecutors see a link between Ms. Marks’s criminal activity and Mr. Santos. The same team of U.S. attorneys handled their cases; the proceedings share the same court docket number and were overseen by the same judge, Joanna Seybert.

Mr. Santos has not been charged with falsifying the loan or with other campaign finance violations, and Ms. Marks’s lawyer has said that she is not cooperating with prosecutors. But Mr. Santos’s proximity to the criminal activity admitted by Ms. Marks would seem to leave him vulnerable to additional charges.

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In Ms. Marks’s charging papers, prosecutors laid out a scheme centered on Mr. Santos’s desire to qualify for a Republican campaign committee program that offered candidates logistical, political and financial support. In order to be considered, candidates needed to raise $250,000 in donations in a single quarter.

In court papers filed on Thursday against Ms. Marks, prosecutors portrayed Mr. Santos, who was described as “co-conspirator #1,” as “lost and desperate” at the end of 2021. Having failed to raise the necessary $250,000 by the end of 2021, they say he resorted to a familiar strategy: He bent the truth.

Citing text messages and emails, prosecutors said that Mr. Santos and Ms. Marks agreed to file reports that said the campaign had raised the money it needed to after all, by including fake contributions from relatives who had never actually donated.

“These are the donations we spoke about last night before we went to sleep,” reads a text from Mr. Santos to Ms. Marks that included a list of relatives and donation amounts.

Three days later, Ms. Marks texted Mr. Santos, court records say, seeking the “list of donors — your family.” Mr. Santos sent it along once more, this time with the family members’ addresses and occupations.

The false donations, over $50,000 in all, allowed Mr. Santos to be selected for the program.

Mr. Santos’s campaign treasurer, Nancy Marks, pleaded guilty on Thursday to one count of conspiracy related to her oversight of Mr. Santos’s finances.Credit…Uli Seit for The New York Times

Three months later, in March 2022, prosecutors say that Mr. Santos’s campaign sought additional support of the national party committee and again turned to lies to make their case.

In a presentation the Santos campaign made to the national party, court records say, the campaign reported that a “key factor” of Mr. Santos’s success was the “[p]ersonal and political capital that will allow for a fully funded operation.”

Here, prosecutors say, is where the $500,000 loan came in. In its April 2022 quarterly report, Mr. Santos’s campaign filings said that he lent the campaign half a million dollars that prosecutors said was never deposited and that Ms. Marks acknowledged last week was a fiction. Even so, it bolstered his image as a wealthy, self-funding candidate and helped the campaign appear more robust and well-funded than it was — dissuading would-be primary challengers.

The loan had another potential benefit. As a member of Congress running for re-election, Mr. Santos would have been able to continue to fund-raise. If he raised enough, he could “repay” himself the fictional loan — potentially pocketing $500,000 in contributions.

The loans Mr. Santos made to his campaign have long drawn scrutiny. In his initial House run in 2020, he reported having lent himself $80,000, though his financial disclosure said his annual salary was just $55,000, and he had no savings account.

But in 2022, he reported a startling turn in fortune. He claimed to have made $750,000 in salary plus more than a million dollars each year in dividends from his company, the Devolder Organization — even though the company had no visible footprint or website.

Nathan Reilly, a former prosecutor with the Eastern District of New York’s public integrity section, said that if Mr. Santos is not able or willing to negotiate a plea, prosecutors might bring additional charges.

Mr. Santos has remained quiet about Ms. Marks’s conviction. His lawyer, Joseph Murray, declined to answer reporters’ questions in Central Islip on Thursday.

On Friday afternoon, Mr. Santos used social media to thank his supporters while striking a defiant tone. “I’ve never run from tough questions, and I never intend to do so,” he said. “I dare anyone to find an elected who engages with the people more than I do.”

He is due back in court on Oct. 27.

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