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- AgriBioTech repaid a $10 million loan to the Budd family shortly before going bankrupt, prompting a lawsuit from farmers who said they should have been paid first.
- It's misleading to say the Budd family "made" money from the repayment, since it was a bridge loan and they ultimately agreed to give back $6 million.
- The Budd family did donate to a group that opposes McCrory, Club for Growth Action. But those donations happened years before Budd and McCrory ran for Senate.
To hear Pat McCrory tell it, the family of one of his opponents has been "ripping off farmers."
Not only that, McCrory suggests that some of the money owed to farmers has instead gone to special interest groups that are attacking his campaign for U.S. Senate.
Yes, there is a lot to unpack here. Let’s start with the basics.
McCrory, former governor of North Carolina, is one of several Republicans now running for the U.S. Senate. The opponent in McCrory’s crosshairs is U.S. Rep. Ted Budd, who was endorsed by former President Donald Trump and is seen as one of the stronger candidates in the race.
During Pete Kaliner’s radio show on Sept. 17, McCrory said that the Budd family is under scrutiny for its involvement in a seed company called AgriBioTech, which ultimately declared bankruptcy. The Washington Post wrote a detailed story about the settlement, and other media outlets followed-up with their own stories about the controversy.
McCrory accurately pointed out that the company repaid a $10 million loan from the Budd family shortly before going bankrupt. He accused them of "ripping off farmers." Then he said this:
"How did the Budd family somehow recover and pay off all their loans before the bankruptcy, and then lose a civil court case about this?" he said.
While judges did rule against the Budd family, the legal battles technically ended because the parties involved settled out of court. But here’s the part of McCrory’s statement that we wanted to fact-check:
"And, you know, some of that same money now that was made is being used on TV ads against me, because the Budd family also helps give donations to these Washington special interest groups that are running negative ads against me in the Senate race."
Here, McCrory suggests that the Budd family:
Made money through the AgriBioTech loan repayment
Donated that money to "special interest groups"
And that the special interest groups are using the Budd family money to run negative ads against him.
Is that all true? McCrory is drawing some long, squiggly lines to try to connect those dots.
McCrory referred to money "that was made" from the AgriBioTech settlement. But it’s not clear the family "made" much money at all.
Budd’s father, Richard, agreed to take over as chief executive in March 1999 as AgriBioTech struggled. Shortly thereafter, Richard Budd secured a $10 million loan that he then transferred to the company. Ted Budd signed as one of 11 "co-makers" of the loan, allowing his stock to be used as collateral, campaign spokesman Jonathan Felts said.
The company repaid the loan to the family, then declared bankruptcy seven months later. The federal government estimated the bankruptcy left $50 million in payments undelivered to farmers and others.
These details all come from the Washington Post report.
Other creditors sued, saying the company should’ve paid them before repaying the Budd loan. They also alleged that Richard Budd improperly transferred assets to his family, including Ted. (The family denies these claims.)
A federal bankruptcy judge in 2005 ruled that Richard Budd would have to repay $15 million, a figure that accounted for the original loan plus interest and other costs. The two sides settled the case out of court later that year, with "Budd entities" agreeing to pay about $6 million.
So let’s recap. The Budd family loaned AgriBioTech $10 million. The company then repaid the loan with $25,234 interest, the Post reported. Creditors sued. Then Budd "entities" agreed to repay about $6 million, leaving them with about $4 million.
In the end, there was no admission of wrongdoing. The money AgriBioTech distributed to the Budd family was repaid to the bank that issued the initial loan, Budd spokesman Felts told PolitiFact.
Meanwhile, "Richard Budd and his family never sold their ABT stock so they lost all of that investment when the company went bankrupt," Felts said.
Should the money that AgriBioTech paid to the Budds have gone to farmers instead? People are free to debate. Did the Budd family "make" money off their loan to AgriBioTech? That seems like a stretch.
Now, who are the "special interests" using Budd money to attack McCrory?
Club for Growth Action, a conservative PAC, has endorsed Budd and is running negative ads against McCrory. When we reached out to McCrory about his comments, campaign spokesman Jordan Shaw pointed out that Budd’s family has donated both to Budd’s campaign and Club for Growth.
However, the donations Shaw cited were given years before Budd announced his run for Senate.
Richard Budd and Joe Budd, Ted’s brother, have donated a combined $70,000 to Club for Growth Action. Each donated $25,000 in 2016 and $10,000 in 2018, according to Federal Election Commission records.
While McCrory singled-out "Washington special interest groups" in his interview with Kaliner, his spokesman added that Budd is also receiving donations from family members and people connected to AgriBioTech. Shaw noted that Budd loaned himself $250,000, FEC records show. He also claimed that Budd has received donations for former AgriBioTech executives.
PolitiFact NC asked Shaw for evidence that the money AgriBioTech paid the Budd family was the money donated to Club For Growth. After all, the family members could have used funds of their own that they earned or acquired through other means.
Shaw said McCrory’s broader point is that the Budd family accumulated "wealth" through AgriBioTech, and is now using some of it to fund attack ads.
Ultimately, though, there’s no way for Shaw to know whether the money Budd’s father and brother donated years ago was used on ads against McCrory. Club for Growth Action doesn’t exactly need to look beneath its couch cushions for old donations. The group announced in June that it had raised $5.1 million to support Budd’s Senate campaign, and that it plans to raise more.
McCrory said the Budd family "made" money by having its loan repaid by AgriBioTech. There are several reasons available evidence doesn’t support that. The Budd family loaned the company $10 million, got about $10 million back, then had to repay $6 million of it.
So, in a vacuum, the family is down about $6 million. Now, it would be hypothetically possible for the Budd family (or anyone who’s fiscally savvy) to take that $10 million repayment, invest it wisely, and have it grow — all before having to repay $6 million. However, Budd’s spokesman says the family used the money to repay the bank.
Budd’s father and brother have donated money to Club for Growth Action, a group that’s now running attack ads against the former governor. But the donations were made in 2016 and 2018, years before Budd decided to run for senate. So it’s highly unlikely those donations, specifically, are being used against McCrory now.
McCrory’s statement contains an element of truth -- the Budd family has, in the past, contributed to a political group that is now running ads against McCrory. But it ignores critical facts that would give a different impression. That’s our definition of Mostly False.
Audio from the Sept. 17, 2021 episode of The Pete Kaliner Show.
Email exchange with Jordan Shaw, spokesman for the Pat McCrory U.S. Senate campaign.
Phone interview and email exchange with Jonathan Felts, spokesman for the Ted Budd U.S. Senate campaign.
Story by the Washington Post, "Trump’s pick in a key Senate race touts his agriculture ties. He doesn’t mention his role in a bankruptcy that cost farmers millions," posted Aug. 31, 2021.
Story by the Charlotte Observer, "GOP Senate campaign heats up after report tying Budd to bankruptcy that hurt farmers," updated Oct. 7, 2021.
Federal Election Commission records of donations to the Ted Budd for Senate campaign.
Federal Election Commission records of donations to Club for Growth Action.
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