Tag: campaign finance

Why does it Matter if the NRA Used Russian Money to help Donald Trump’s Election?

The old saying goes, that “when you have a hammer, everything looks like a nail.” And as a campaign finance lawyer, I have to remind myself that not every story is a money in politics story. But the more I look at the 2016 election and what transpired, campaign finance is at the heart of the scandal.

To wit, this January, McClatchy reported that the FBI is allegedly investigating whether a Russian banker named Aleksander Torshin (who’s also wanted on criminal charges in Spain for unrelated matters) may have funneled money into the National Rifle Association (NRA) for the benefit of the candidacy of Donald Trump in 2016. At this point, all this is just a press report. We don’t have confirmation of this investigation.

In March, Politico reported that the Federal Election Commission (FEC) is investigating whether there really was any Russian money running through the NRA in the 2016 presidential election. This comes on the heels of Oregon Democratic Senator Ron Wyden asking similar questions to the NRA.

Illegal Political Sources

But why would this be so significant if the story of rubles flowing through the NRA is correct? For one, such spending by a foreigner in an American election is totally illegal under American law. Indeed foreign electoral spending has been barred since 1966 amendments to the Foreign Agents Registration Act (FARA). And with a Special Counsel actively indicting people for their roles in the 2016 election, this could become part of that criminal probe.

We Were Warned

Second, if the NRA-Russia-Trump nexus is borne out by the facts, then it will vindicate warnings from Supreme Court Justices and campaign finance reformers who said inviting secretive corporate money into our politics would provide cover for illegal foreign spending in American elections.

This caution was part of Justice John Paul Stevens’ dissent in Citizens United. He was leery of the possibility that inviting corporations into U.S. elections could invite foreign influence. As he wrote, “[u]nlike voters in U.S. elections, corporations may be foreign controlled.” He also noted the absurdity of giving equal protection to foreign speakers in this context: it would be like “accord[ing] the propaganda broadcasts to our troops by ‘Tokyo Rose’ during World War II the same protection as speech by Allied commanders.”

This warning that dark money could hide foreign money was particularly pronounced from transparency advocates among campaign finance reformers. In 2016, the FEC tried to promulgate new rules to clarify reporting requirements. But the FEC deadlocked and no new rules were finalized.

Without Clear Transparency Rules Dark Money Flourished

In the absence of new clear rules from the FEC, or Congress for that matter, dark money has increased. As I described in the law review article Dark Money As a Political Sovereignty Problem, since 2010, over $800 million in “dark money” has been spent in federal elections. Because of the dark money problem, often we don’t know what we don’t know about corporate money in politics—including whether it is from an illegal foreign source.

There is a data chart showing $183.8 million in dark money in 2016; $177.7 million in dark money in 2014; $308.6 million in dark money in 2012 and $135.6 million in dark money in 2010.

The growth of dark money is often blamed on the Supreme Court’s 2010 decision, Citizens United v. FEC. Paradoxically, Citizens United upheld the constitutionality of disclosure of the underlying sources of money in politics by a vote of 8 to 1. But regulators did not take up the Supreme Court’s open invitation to improve disclosure laws after Citizens United, thereby allowing dark money to metastasize like a cancer on our democracy.

How Dark Money Gets Dark

Here’s how dark political money works. Say you have a company that wants to exercise its Citizens United rights, but it doesn’t want to tell the public. That company gives the money to a politically active 501(c)(4) social welfare organization or 501(c)(6) trade association. Then that nonprofit buys political ads in a federal election. The FEC doesn’t require the nonprofit to reveal where it got the money. Even if the company is publicly traded, there is no SEC rule that requires the company to tell investors that they are spending money in politics. For even more secrecy, money can also be routed through a shell corporation like an LLC to make tracing the money even more difficult.

The Allegation

The reporting by McClatchy (and others) alleges that NRA’s Institute for Legislative Action (ILA), a 501(c)(4) arm of the NRA, that does not disclose its donors, received money from the Russian banker Torshin. We don’t know if that happened.

We do know how the NRA spent its money. In 2016, the NRA expended $54,398,558 in outside political spending. The NRA spent $31 million of that money to support Mr. Trump’s candidacy. According to Open Secrets.org, showing $183.8 million in dark money in 2016; $177.7 million in dark money in 2014; $308.6 million in dark money in 2012 and $135.6 million in dark money in 2010.

It is outlandish to think that the NRA would wittingly or unwittingly violate American campaign finance law? At this point we don’t know if they have done anything wrong. However, the NRA has a long history of fighting campaign finance regulations. In 2010 when the Congress was on the verge of passing the DISCLOSE Act which would have brought transparency to money in politics post-Citizens United, lobbyists for the NRA got a legislative carve out so that new disclosure would not apply to them.

The NRA was also center stage in litigation against the last big federal campaign law, the Bipartisan Campaign Reform Act (better known as BRCA or McCain-Feingold). In 2002, the NRA and one its PACs, National Rifle Association Political Victory Fund were plaintiffs challenging the constitutionality of BRCA. This case was consolidated into the case that became McConnell v. FEC, a case that ended up upholding the constitutionality of BRCA, including its campaign finance disclosure requirements. Moreover, in 2001 the NRA was held liable for campaign finance violations from the 1978 and 1982 elections.

Conclusion

Like so many aspects of the multiple investigations into what really happened in the 2016 election, the public has no idea what will ultimately be revealed. Reading the news has become like a live action spy novel. It is possible further investigation will only exonerate the NRA and the Russian banker. But one strain to keep an eye on is whether any foreign money helped elect a U.S. president. Did I mention that’s completely illegal?

 

© Copyright 2018 Brennan Center for Justice at New York University School of Law

Watchdog: ‘Reason To Believe’ Trump And Super PAC Violated Election Law

Donald Trump Campaign finance election lawA campaign finance watchdog said Wednesday that chief White House strategist Steve Bannon may have illegally benefited from spending by a pro-Trump super PAC while he led Trump’s presidential campaign.

The Campaign Legal Center believes Make America Number 1, a super PAC that backed Trump, may have improperly subsidized Bannon’s salary. In a letter to regulators on Wednesday, the Campaign Legal Center argued that details in Bannon’s recent financial disclosure give “reason to believe” the Trump campaign and the super PAC may have violated federal election rules.

While Trump initially criticized his Republican opponents for their close ties to super PACs and disavowed outside groups that sought to support his bid, his team embraced outside help during his general election race against Hillary Clinton and pushed the boundaries of federal election rules as much as any other 2016 candidate, testing regulations meant to ensure super PACs operate independently from campaigns.

Bannon’s disclosure, filed March 31, confirmed his financial connection to Glittering Steel, a film production company that was involved with Bannon’s “Clinton Cash” documentary about the Clinton family and “Torchbearer,” which starred Duck Dynasty’s Phil Robertson.

Make America Number 1 paid the film production company nearly $1 million during the 2016 election cycle, with payments starting in July 2015 and continuing after Bannon became the Trump campaign’s CEO. The Trump campaign never paid Bannon, who previously was the executive chairman of Breitbart News, a right-wing news site.

The filing says Bannon resigned from Glittering Steel and stopped receiving monthly consulting payments from the company in August 2016, when he joined the Trump campaign. But the form indicates Bannon kept an ownership interest in Glittering Steel, worth at least $100,000. Bannon’s report says he’s trying to sell his stake in the company.

“As a result, as Bannon worked for the Trump campaign without pay, he continued to benefit, directly or indirectly, from the estimated $267,500 in payments that Make America Number 1 made to Glittering Steel LLC after or around his officially joining the campaign,” wrote the Campaign Legal Center’s general counsel, Larry Noble.

The Campaign Legal Center first filed its complaint with the Federal Election Commission in October. It’s unclear if the agency has decided to investigate, as the FEC doesn’t disclose investigations until they’re completed. Its commissioners have frequently deadlocked on whether to pursue apparent election law violations.

Overall, the FEC has done little to ensure that super PACs remain independent from candidates in the wake of the Supreme Court’s 2010 Citizens United decision, which allowed companies and unions to spend unlimited amounts of money on elections.

Super PACs and politically active nonprofits spent almost $1.5 billion during the last election cycle, with much of the money coming from ultra-wealthy individuals like billionaire Robert Mercer, the conservative hedge fund executive who financed Make America Number 1. His daughter, Rebekah, led the super PAC, which originally backed Texas Sen. Ted Cruz in the Republican primary race.

The Mercers pressed Trump to hire Bannon to lead his campaign, according to the Washington Post. Over the years, the Mercer family has funded Breitbart News, as well as the Government Accountability Institute, a conservative investigative nonprofit led by Bannon. Bannon and the Mercers founded Glittering Steel together, the Post reported.

The Mercers are also major investors in Cambridge Analytica, a data firm that worked for both Make America Number 1 and the Trump campaign. Bannon received monthly consulting payments from Cambridge Analytica and served on its board. Though Bannon’s financial disclosure says he resigned from the firm when he started working for Trump, he still has a stake in the company, worth over $1 million, that he’s planning to sell.

The Campaign Legal Center said that there’s reason to question whether Bannon did in fact resign from Glittering Steel and Cambridge Analytica in August.

Bannon’s financial disclosure says he resigned from Breitbart News then, but Breitbart’s CEO Larry Solov recently told the Senate Press Gallery that Bannon resigned from Breitbart in November, days after Trump’s victory.

The relationship between Bannon and Breitbart News, which gave Trump favorable coverage throughout the campaign, has generated controversy in recent weeks. Bannon has reportedly maintained contact with Breitbart editors about the site’s coverage. That news prompted a liberal watchdog group, Citizens for Responsibility and Ethics in Washington, to request an investigation into whether Bannon has violated his White House ethics pledge.

News reports suggested last week that there’s a growing rivalry between Bannon and Trump’s son-in-law and advisor Jared Kushner, and that Bannon could be on his way out the door, after Trump removed Bannon from a position on his National Security Council.

Trump did little to quiet talk of a shake-up on Tuesday when the New York Post asked him if he still has confidence in Bannon. “I like Steve, but you have to remember he was not involved in my campaign until very late,” he said. “I had already beaten all the senators and all the governors, and I didn’t know Steve. I’m my own strategist and it wasn’t like I was going to change strategies because I was facing crooked Hillary.”

*This article was produced by MapLight in partnership with Fast Company.

ARTICLE BY MapLight

© Copyright MapLight

Amid Hours of Debate and Insult, Campaign Finance Gets 85 Seconds

All but ignored during the previous two presidential debates, campaign finance appeared ready to have its moment in the sun during the final televised bout. Within two minutes of the debate’s opening, former Secretary of State Hillary Clinton, the Democratic nominee, raised the issue of the landmark 2010 Supreme Court decision that allowed a flood of money from outside groups to pour into elections.

Clinton promised to appoint justices “that will stand up and say no to Citizens United, a decision that has undermined the election system in our country because of the way it permits dark, unaccountable money to come into our electoral system.”

Then, crickets.

Hillary Clinton, Donald Trump, Debates
Photo credit: Ethan Miller, Getty Images News

Republican nominee Donald J. Trump, who attacked Clinton on Twitter earlier this month as “the single biggest beneficiary of Citizens United in history,” passed on the issue, instead using the question to pledge his support for gun rights and opposition to abortion.

The debate encapsulated the two candidates’ approaches to the issue of money in politics during the general election campaign. Across three debates spanning four-and-a-half hours, Clinton and Trump have spent a grand total of one minute and 25 seconds on a subject that an overwhelming number of Americans consider to be a major threat to the nation’s democratic traditions. A poll last year found that 85 percent of Americans believe the system of campaign financing requires either a complete rebuilding or fundamental changes. The two candidates have so far raised more than a half-billion dollars on their presidential bids.

Trump, who launched his campaign with a grandiose promise to pay for his own presidential bid, has used the issue of money in politics occasionally to jab at Clinton, mostly claiming she used her office to encourage donations to her family’s eponymous charitable foundation or her presidential campaign.

The billionaire mogul has sought to tie Clinton to unpopular bankers, claiming during the debate that her advertisements were paid for by her “friends on Wall Street that gave so much money because they know you’re going to protect them.” Meanwhile, Trump has claimed: “By self-funding my campaign, I am not controlled by my donors, special interests or lobbyists. I am only working for the people of the U.S.!”

Even so, Trump, who said last year he “loved the idea of campaign finance reform,” has soft-pedaled earlier critiques of money in politics. He was criticized last month for hiring David Bossie, a long-time Clinton critic who helped orchestrate the Citizens United battle, as his deputy campaign manager. His campaign also is currently the subject of a complaint alleging that two former campaign staffers went to work for a super PAC boosting his campaign without going through a mandatory 120-day “cooling-off” period.

Hacked emails published recently by WikiLeaks show how the Clinton campaign staff turned supportive super PACs into integral parts of her campaign, despite FEC rules prohibiting coordination between candidates and outside groups. A July 2015 campaign memo, posted by a hacker known as Guccifer 2.0., laid out plans for collaborating with Correct the Record, a super PAC created by a longtime ally. The memo recommended that the Clinton campaign “work with CTR… to publicize specific GOP candidate vulnerabilities.”

While the Clinton campaign has confirmed its chairman’s personal email account was hacked, her team has not corroborated the authenticity of the emails that Wikileaks has been posting online daily.

Wednesday night’s forum also featured a pointed question about ethics, with moderator Chris Wallace asking Clinton about her pledge to “avoid even the appearance of a conflict of interest” involving her family’s foundation while she was Secretary of State. Wallace referred to a recent ABC report that found individuals considered “FOB,” or friends of Bill Clinton, were given special attention by the State Department when they offered to provide assistance in Haiti in the aftermath of a devastating earthquake in 2010.

“Everything I did as Secretary of State was in furtherance of our country’s interests and our values,” said Clinton, who chose to talk about her family foundation’s efforts to help millions of people get access to HIV/AIDS medication, rather than explain any potential ethical issues.

When Trump questioned the foundation’s work in Haiti — which was scrutinized by The Nation in 2011 — Clinton said that the foundation had “raised $30 million to help Haiti after the catastrophic earthquake,” adding that “we’re going to keep working to help Haiti because it’s an important part of the American experience.”

Clinton said she would “be happy to compare what we do with the Trump Foundation,” noting that Trump had used his charity’s money to purchase a six-foot-tall portrait of himself. The Washington Post reported that the Donald J. Trump Foundation had spent $20,000 to buy the artwork, and “may have violated IRS rules against ‘self-dealing.’”

When Trump said his foundation’s money “one hundred percent goes to different charities,” Wallace asked him about a report that he had used the charity’s funds to settle a number of lawsuits involving his for-profit businesses.

“No, we put up American flag, and that’s it,” Trump responded. “They put up the American flag. We fought for the right in Palm Beach to put up the American flag.”

One of the lawsuits did involve the height of a flagpole at Trump’s golf course in Palm Beach, Florida. The Post found that Trump also used his charity to pay a settlement in New York. Both of the expenditures could violate self-dealing rules, the paper wrote.

Earlier this month, New York’s attorney general, Eric Schneiderman, ordered the Trump Foundation to stop raising money in his state, following a report that the charity did not obtain the required certification to solicit donations there.

This article was written by Frank Bass. Andrew Perez contributed reporting. Read the original article here: Amid Hours of Debate and Insult, Campaign Finance Gets 85 Seconds

© Copyright MapLight

Watchdog Files Complaint Claiming Illegal Trump, Clinton Super PAC Coordination

Hillary Clinton Super PAC Donald Trump Super PACA campaign finance watchdog group is calling on federal election regulators to investigate whether Donald Trump and Hillary Clinton’s presidential campaigns have illegally coordinated with super PACs supporting them.

Two pro-Trump super PACs — Make America Number 1 and Rebuilding America Now — may have made prohibited in-kind contributions to the Trump campaign, the Campaign Legal Center said Thursday. The Washington-based organization said a pro-Clinton organization, Correct the Record, may be guilty of similar violations.

Because super PACs can accept unlimited contributions, federal law requires them to operate independently of campaigns. Super PACs are relatively new political entities, created in the wake of the Supreme Court’s 2010 Citizens United decision. Candidates and outside groups have tested the legal boundaries surrounding them, especially in the current election cycle. So far, super PACs have raised more than a half-billion dollars in support of the 2016 presidential nominees.

The Campaign Legal Center filed complaints against the campaigns and super PACs on Thursday with the Federal Election Commission. It’s unlikely the commission will decide before the election whether to take any actions.

The pro-Clinton group, Correct the Record, has been testing the rules virtually since its inception. Correct the Record has long asserted it can work directly with Clinton’s campaign. The super PAC says it’s only producing and posting communications online, and that its work is exempt from FEC rules regarding “coordinated communications.” In a statement last May, Correct the Record said it “will not be engaged in paid media and thus will be allowed to coordinate with campaigns.”

Lawyers from the Campaign Legal Center say that argument is misleading, because Correct the Record has made “coordinated expenditures,” which would also be considered in-kind contributions. They add that Correct the Record’s payments to its staff would represent prohibited donations if its employees’ work was done in coordination with the Clinton campaign.

“The factual record demonstrates that the vast majority of Correct the Record’s expenditures have been for activities like opposition research, message development, surrogate training, reporter pitches, media booking, video production, ‘rapid response’ press outreach, and other ‘earned media,’” the complaint says. “Any such expenditures made in ‘cooperation, consultation, or concert, with, or at the request or suggestion of’ Clinton’s campaign committee constitute in-kind contributions to the campaign.”

Since June 2015, the Clinton campaign has paid $282,000 to Correct the Record, which the super PAC has characterized as payments for “research,” according to campaign finance records.

Trump was slow to warm up to super PACs, disavowing support from outside groups during the Republican primary, but his campaign is deeply tied to two groups that want to help him defeat Clinton this November. One of those organizations, Rebuilding America Now, is headed by former top staffers to the Trump campaign.

Campaign staffers who have knowledge of a candidate’s strategy and plans are required to go through a 120-day “cooling-off period” before joining a supportive super PAC. However, an investigation published in August found that Rebuilding America Now began paying its political director, Ken McKay, only days after he left his job as a senior adviser to the Trump campaign. Reuters subsequently reported that Rebuilding America Now paid another operative, Laurance Gay, right after he left a position with Trump.

Rebuilding America Now has said both consultants were only unpaid volunteers for the Trump campaign and possess no strategic knowledge from their time working for the real estate mogul.

According to the Campaign Legal Center, McKay and Gay qualify as employees of the Trump campaign, regardless of whether they were paid for their services. The group asserts the Rebuilding America Now operatives acquired “inside information” while they were with the Trump campaign, and adds that there’s “strong reason to believe” that McKay and Gay have used that information in crafting communications in support of Trump.

The complaint also concerns the closeness between the Trump campaign and Make America Number 1. The Campaign Legal Center says that the super PAC may have made prohibited “coordinated communications” by employing common vendors.

The anti-Clinton super PAC was originally created by hedge fund billionaire and GOP mega-donor Robert Mercer as a way to support U.S. Sen. Ted Cruz’ unsuccessful bid for the 2016 Republican presidential nomination. Around the same time the super PAC shifted its focus to defeating Clinton, Trump’s campaign began hiring staff and vendors associated with the Mercer family’s businesses.

Cambridge Analytica, a Mercer-owned data firm, has done work for both the Trump campaign and Make America Number 1. In August, the firm was paid $250,000 by Trump and more than $400,000 by the super PAC. That same month, the Trump campaign hired Breitbart News chief Stephen Bannon as its chairman, reportedly at the behest of the Mercer family. Robert Mercer has invested in Breitbart, and Bannon helped Mercer launch Cambridge Analytica, according to RealClearPolitics.

Kellyanne Conway, who’s serving as campaign manager for Trump, previously helped lead Make America Number 1 when it was a pro-Cruz effort. Her consulting firm has since been paid by both the super PAC and the Trump campaign. Make America Number 1 paid $247,000 to Conway’s firm, The Polling Company, on Aug. 23. One week later, the Trump campaign paid the company $128,000.

The Trump and Clinton campaigns and the super PACs included in the Campaign Legal Center complaints did not immediately respond to requests for comment.

ARTICLE BY Frank Bass of MapLight

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