Connor Flotten, an American Promise Research Associate, has the roundup you need to stay on top of fast-evolving corruption, election spending, and reform news.
Another week, another set of stories about how our elections are being bought out from under us and all that matters is fundraising and the donor class. I know it gets frustrating writing these, as important as it is to shine a spotlight on what’s happening, and I hope that they get you fired up too. But, starting this week, I’m also going to be offering solutions on what you can do to channel that righteous anger into something that will help solve these problems.
Oh, Canada. A complaint by the Campaign Legal Center alleges that ECN Capital Corporation, a Toronto-based financing firm may have contributed more than $100,000 to U.S. political committees from 2018 to 2022. Astute readers will note that Toronto is in Canada, which is not part of the United States. And yet they are allegedly giving $50,000 to the Florida Democratic Party and approximately $53,000 to Ron DeSantis. Curious! Federal and Florida State law prohibit campaign contributions made by foreign nationals and corporations, and although ECN listed the donations under a US address, the complaint alleges that they were directed by ECN’s CEO and CFO, who are Canadian nationals, which would make the donations illegal.
From The Arizona Capitol Times:
A rare bit of good news: a legal victory for proponents of Arizona’s Voters’ Right to Know Act, which requires those making large independent expenditures or campaign contributions to disclose the source of the funds and the identity of large donors. The Act was part of a ballot initiative that Arizonans passed with more than 70% of the vote in 2022. A superior court judge dismissed a state Constitutional challenge to the act. Those challenging the act claimed that having to identify themselves and actually stand behind the ads they pay for would chill free speech.
Honestly, this one is kinda impressive. This newsletter spends a lot of time on politicians raising absurd amounts of money for their campaigns, but I don’t know if I’ve ever covered one who managed to lose money. Things have not been going great for George Santos, with him and his campaign suffering a variety of (arguably self-inflicted) problems. Now, in the first quarter of 2023, his campaign took in about $5,300 but had to give out $8,300 in refunds, meaning that it’s $3,000 in the red. I’m really not sure where one goes from there.
From The New York Times:
This one weird trick lets you avoid paying for legal defense! Trump has changed how online donations are allocated between his campaign and his PAC, Save America. Previously, it had been 99% to the campaign, and 1% to the PAC. Now, 90% of online donations go to the PAC, with the rest going to the campaign. The PAC has been footing the bill for Trump’s various legal troubles, which creates “an unusual incentive for the leadership PAC to take in more than it normally would,” as it is illegal to use campaign money for personal expenses, per Adav Noti, senior vice president and legal director of Campaign Legal Center. Certainly seems easier than starting a GoFundMe.
A bit of star power in the world of campaign finance. Leonardo DiCaprio (yes, that Leonardo DiCaprio), testified in DC court earlier this year. The case in question is the trial of hip hop artist Pras Michel, who is being charged with taking $80 million from a Malaysian businessperson, Jho Low, to buy influence with President Obama’s 2012 campaign and President Trump’s administration. DiCaprio testified to hearing comments by Low and others that they intended to donate large amounts of money to political campaigns in the US.
Who cares about “endorsements,” or “support,” or “votes?” The only thing that matters in elections is who has the most money, and Ron DeSantis has “A heap of donor cash.” A $110 million-sized heap, in fact, eclipsing the war chests of other Republican presidential candidates, between his state reelection account and supporting Super PACs. His state election campaign has $80 million. While federal law prohibits transferring that money into a federal campaign account, campaign finance law mostly operates on the same principles as magic spells, and as long as he follows the correct series of complicated steps, he can transfer that money into a totally independent PAC and it’s probably not illegal.
From The Associated Press:
Who hasn’t accidentally taken half a million dollars from an executive of a disgraced cryptocurrency company, wrongly reported the donation, and then turned over the money to the U.S. Marshals Service? This very relatable situation has befallen the Oregon Democratic Party, who was previously fined $15,000 by state election officials for wrongly reporting a donation from Nishad Singh, former engineering director at collapsed cryptocurrency giant FTX, who pleaded guilty in February to federal criminal fraud charges. Now, the party is giving over the $500,000 donation to the U.S. Marshals Service, along with $7,100 from FTX founder Sam Bankman-Fried
Donation records show that a nonprofit funded by Peter Thiel, a Republican megadonor, gave $3 million to the New Venture Fund, a liberal nonprofit that backs groups connected to the Democratic party, in 2021. At the same time, Thiel was also backing Republican candidates for the 2022 midterm elections. Anna Massoglia of OpenSecrets suggests that either Thiel was using the NVF to funnel money to a less progressive organization that it supports, or an accountant for Thiel just filled out a form wrong and put down the wrong name. Either Thiel is playing both sides, so he always comes out on top, or our obtuse campaign finance system allows donors to hide millions of dollars (it does), or a simple accounting error led to $3 million being reported incorrectly. All of those seem fine!
Speaking of things that seem fine and definitely aren’t a problem at all: analysis by OpenSecrets has found that in 2022, federal political committees took in more than $615 million in untraceable “dark money.” That’s a new record for midterm elections. 2022 also marks the third election cycle in a row where Democrats benefited more from dark money than Republicans, to the tune of approximately $330.7 million. The largest dark money groups involved in elections are the ones connected to Democratic and Republican leadership in Congress, which funnel money directly to party PACs. Really, I see no problem with large donors and party leadership being able to command hundreds of millions of dollars with no accountability or transparency. What could possibly be wrong about that?
From The Associated Press
Larry Householder, the former Speaker of the Ohio House, was sentenced to 20 years in prison, the maximum sentence, for his part in the state’s largest corruption scandal. Householder was found guilty of running a $60 million scheme to get himself and his allies elected and secure a $1 billion bailout for energy company FirstEnergy Corp, which funded the plan. Anyone who follows campaign finance news will note that businesses spending millions of dollars to back politicians who turn around and give them favorable treatment is just business as usual in America. Unfortunately for Householder, he did slightly too much corruption and stepped out of bounds, using campaign money to pay for personal expenses and not following the magic rules around coordination that differentiate “independent expenditures” from bribery.
Larry Householder, the former Speaker of the Ohio House, was recently sentenced to 20 years in prison, the maximum sentence, for his part in leading “a criminal enterprise responsible for one of the largest public corruption conspiracies in Ohio history,” as described by US Attorney Kenneth L. Parker.
Householder was found guilty of running a $60 million scheme to get himself and his allies elected and secure a $1 billion bailout for energy company FirstEnergy Corp, which funded the plan. Household received regular contributions of $250,000 to his 501(c)(4) organization, which he used to pay for campaign expenses, support other allies running for the Ohio House, and pay off personal expenses, including credit card debt.
In return for the support and funding, Householder and his allies forced through a $1.3 billion bailout of two struggling nuclear power plants run by FirstEnergy. When Ohio taxpayers who didn’t want to be on the hook for the giant bailout collected signatures for a ballot initiative to overturn the measure, FirstEnergy spent $38 million to crush that campaign. All told, First Energy spent about $61 million to secure a $1.3 billion taxpayer-funded bailout — and the risk was almost worth the reward until federal investigators unearthed Householder’s corrupt scheme.
501(c)(4) organizations are often described as “dark money” organizations. Because of lax laws around campaign finance reporting, they’re able to take in unlimited amounts of money without having to report the source of their donations to the FEC. A lobbyist for FirstEnergy told Householder “They can give as much or more to the (c)(4) and nobody would ever know.”
Householder and his allies may have been convicted for their actions, but it’s not just because they benefited from dark money. Householder got slightly too corrupt, violating (usually very lax) rules around non-coordination with independent spending groups and using the money on personal expenses. Dark money groups are prolific and a major part of “business as usual” in American elections, with federal political committees taking in more than $615 million from dark money groups (of which 510(c)(4)s are a major part) and untraceable shell companies in 2022. Almost none of the people or organizations involved with those groups are facing any sort of criminal charge, let alone basic scrutiny. How many of those groups are making an investment like FirstEnergy did, spending a few million dollars in exchange for favorable political conditions worth billions?
In order to correct the Supreme Court decisions that have enabled this sort of secretive, unlimited spending, we need a Constitutional solution. The For Our Freedom Amendment would offer lasting reform that protects the free speech of every American by allowing the States and Congress to pass reasonable campaign finance regulations and limits.
Angry? Here’s what you can do:
Secure Candidate Pledges:
It’s easy to get angry at our elected officials for taking money from wealthy donors and ignoring the issues that matter most to us. And don’t get me wrong, a lot of the time they deserve it. But it’s important to remember that they work for us, and to give them a chance to prove that they’re committed to that ideal. Get your elected officials and candidates to sign the American Promise Candidate Pledge, affirming that they’ll use their office to advance the For Our Freedom Amendment and fight for We the People, not money.
Donate to power American Promise Campaigns American Promise and citizen-powered campaigns across the country are fighting for the For Our Freedom Amendment to eliminate dark money corruption in politics. Support our cross-partisan work and donate now to help give the power back to the people.