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Let’s Fix the Scam PAC Problem

Let’s Fix the Scam PAC Problem

July 9, 2019 @ 11:58 am
by Admin
in Blog

Political activists are passionate about their causes – right or left, R or D – and, while the era of social media has tainted citizen engagement as disruptive to civil discourse, the reality is that those who are highly involved form the backbone of our democracy.

But, sadly, predatorial political operatives and/or con artists have manipulated the system to use those intense feelings for their own gain. They do this through political action committees that claim to be supporting a particular candidate via fundraising pitches and marketing, but then these organizations show very little in the way of actual resources being spent to promote their stated cause.

The frequency and repulsiveness of this practices has led to a moniker: Scam PAC.

Over the years, the political “consulting class” has developed a negative reputation for detaching what drives many to politics – a sincere desire to better society – and replacing this goal with a love of money, profiteering off candidates and campaigns and fueling the increasing dependence on money in politics. This generalization does a disservice to many well-intentioned practitioners, but the creation of Scam PACs has only given credence to this belief.

And, the problem is pervasive. The FEC even had to issue a memo on the problem prior to the 2016 election, and the Brennan Center’s article on the issue begins with an alarming warning: “beware.”[1]

In 2013, Ken Cuccinelli became a national figure for the conservative movement. He had earned a reputation as a tough Attorney General and one of the leading “checks” on the Obama Administration. After a gubernatorial nomination that saw him push out the “establishment” frontrunner, his campaign became a rallying point for conservatives looking for hope after yet another disappointing national election – with Virginia the main battleground in the off-year.

Where the activists saw an opportunity for change, others saw an opportunity to cash in. Two Arizona brothers, William and Robert Tierney, created a string of PACs that raised $23 million around the country, using Cuccinelli’s messaging, name, and likeness. They then made sure that they and others involved in their scheme received massive paydays and then spent just $109,000 of those funds on the cause.

Last November, the two plead guilty to fraud charges. So, what’s the problem? Is this a case where the problem has been solved? Absolutely not.

There are several problems highlighted here that show the real need for action – beginning with the fact that this is the first case where a Scam PAC operator has been prosecuted.[2]

Second, the laws are murky here at best and the case law is mixed (as you will see below).

Third, this plea does nothing for the countless small dollar donors – intentionally targeted by the Tierneys to fall under the FEC reporting requirements – who gave their hard-earned money to a scheme.

Fourth, the lack of a real, long-term solution continues to put hard-working, inspirational candidates at risk. Cuccinelli sued others who were aimed to get rich off his name, claiming they sapped his fundraising support.[3] While we will never know how much money may have otherwise gone to his campaign coffers, his loss was by just 2.6% despite being outspent by $17.4 million ($38,533,716 to $21,108,649).[4]

Finally, there is no way to measure the long-term damage done to democracy that comes when engaged small dollar donors – a key indicator that someone would also vote, put up a sign, or talk to their neighbor about government – become disenfranchised through being scammed.

Similar figures in the conservative movement have also fallen victim to this practice.

Former Milwaukee Sheriff David Clarke specifically denounced a PAC that raised $2.3 million on a Senate run he never seriously considered. In reporting conducted by OpenSecrets.org, one donor, who gave over $700, was under the distinct impression Clarke was already a candidate based on the emails sent by the group.[5]

Allen West, retired Army lieutenant colonel and former member of Congress, filed an FEC complaint when Scam PACs raised $14.3 million – largely from his name – and did little to help him in an election that he ultimately lost by just 0.6% (1,904 votes). In his case, the FEC admitted that there was “little doubt” that the PACs used West for fundraising and that it “spent very little of the money it raised to support West” but that it was beyond the scope of the commission to take action.[6]

Recently, a court ruling reversed an FEC ruling against a PAC that was using Mike Huckabee’s name and likeness to fundraise during the 2016 presidential campaign, a move FEC Chair Ellen Weintraub said, “will lead to confusion in the political marketplace.”[7]

On the other side of the aisle, a PAC was started for Bernie Sanders that duped “James Bond” actor Daniel Craig out of nearly $50,000. The man who started the entity was arrested for unrelated fraud charges.[8]

In another instance, a known California con man set up a network of PACs to support a number of prominent Democrats, including Sanders and Beto O’Rourke, and used the funds to pay rent, a parking ticket, and his Mercedes-Benz.[9]

Even the President of the United States isn’t immune, facing a Scam PAC crisis created by a longtime ally and well-known operative.

David Bossie, formerly with Citizens United and then Deputy Campaign Manager for the 2016 Trump election, launched the Presidential Coalition. The organization’s activities prompted the 2020 Trump campaign to issue the following statement:

“President Trump’s campaign condemns any organization that deceptively uses the President’s name, likeness, trademarks, or branding and confuses voters.

There is no excuse for any group, including ones run by people who claim to be part of our “coalition,” to suggest they directly support President Trump’s re-election or any other candidates, when in fact their actions show they are interested in filling their own pockets with money from innocent Americans’ paychecks, and sadly, retirements.

We encourage the appropriate authorities to investigate all alleged scam groups for potential illegal activities.”[10]

This condemnation came after it was revealed that Bossie had used connections to as well as the likeness of POTUS to raise $18.5 million with the stated goal of supporting candidates in line with the Trump agenda. Shockingly, only $425,442 was spent toward that effort with the rest going toward fundraising, administrative costs, purchases of Bossie’s book, and money directly to Bossie and his friends.[11]

The Presidential Coalition wasn’t subtle in trying to utilize its connections. According to Variety, “its fund-raising mailers featured an image of the White House inside its logo, donation suggestions of $45 made ‘in honor’ of the 45th president, and, just to drive the point home, a photo of Bossie next to Trump.”[12]

Additionally, this scam is somewhat unique due to the strong connection between its organizer (Bossie) and the subject (Trump). The Campaign Legal Center specifically alleges that the Presidential Coalition “capitalized” on those ties.[13]

Numerous elderly citizens have been identified as being duped by the Presidential Coalition, which specifically targeted them.

To date, there has been no recourse against Bossie or the group despite the leader of the free world’s criticism and request for action. Given that not even the president can be immune from this or protect his likeness and supporters, it’s apparent that serious legislative steps must be taken.

Again, the case law here is murky, but there has been little attention to congressional action which could affect a legal interpretation as well. Here are several suggestions with varying degrees of severity that we encourage legislators to consider in order to combat this problem:

 

  1. Revamp the system to empower candidates to accept or reject PAC support- What if we could overhaul the system in such a way that created a structure where if a candidate declared they were rejecting PAC support, they truly could? Where they could legally put a stop to that over-the-top attack ad they said they disavowed but claimed to have no control over? One idea Take Back Our Republic has been mulling is a concept that would allow candidates to take back control of their campaigns by have a right to accept or deny a PAC’s ability to engage on their behalf. While there could still be firewalls to prevent coordination, it would both empower and provide for greater accountability for candidates.

*More thoughts on this concept to follow in a subsequent paper

  1. Enable candidates to reject specific PACs for misusing a candidate’s name or likeness- This scenario doesn’t require the full system revamp, but it would strengthen candidate rights to identify Scam PACs and misuse of their name and image and then insist the organization cease and desist. Legislation that would allow a candidate to seek immediate address of a particular violation would go a long way toward fixing the problem.
  2. Ban PACs that do not allocate a certain percentage to voter engagement- Requiring PACs to spend a certain percentage of funds on voter engagement – advancing their stated cause – may not have the broad implications of the first two proposals, but it protects small dollar donors by ensuring that organizations they give to are spending money, at least to some degree, to do what they say they will do.
  3. Require a “warning” statement for PACs that have been repudiated or fail to meet certain criteria- Under this scenario, candidates lack the power to shut down a PAC, but, should they repudiate the entity, that organization would be required to warn voters that it did not have the support of the candidate. By making donor prospects aware up front that they were not giving to a project endorsed by their favorite politician, it would not only protect voters from falling victim to fraud but also disincentivize the creation of Scam PACs by limiting their ability to effectively fundraise. With this solution, another possibility would be to require repudiated PACs to make it clear up front to prospective donors the percentage of funds the organization spends on voter engagement.
  4. Provide a transparency measure that informs all prospective donors the percentage of funds a PAC spends on voter engagement- A blanket solution for all PACs requiring they report to prospective donors the percentage of funds spent on voter engagement would, again, reduce the incentive to create Scam PACs and provide transparency to citizens.
  5. Create a reference source where voters could look up the reputation of a prospective PAC- A less effective way to provide transparency would be to have one site function as a reference source whereby donors could look up how a PAC may spend its money – with the percentage spent on voter engagement clearly identified as most Americans cannot decipher this information from a campaign finance report. Perhaps another avenue would be a rating of the PAC based on its actions via a non-partisan source like the FEC.
  6. Strengthen the FEC to better intervene in the case of a Scam PAC- Many campaign finance problems stem from the fact that the FEC is not adequately strengthened and altogether too deadlocked to really be effective. Making substantial changes to give more authority and improve decision-making within the FEC should be a legislative priority.

 

Scam PACs are an underreported and emerging crisis. It violates a candidate’s ability to protect their image and brand integrity as well as their supporters. It violates an engaged citizen’s ability to participate in the process without being concerned with fraud. And, it creates a crisis of confidence in our democracy.

It’s time to end Scam PACs, and we encourage immediate legislative action.

[1] https://www.brennancenter.org/blog/beware-scam-pacs-crowded-presidential-field

[2] https://thehill.com/blogs/blog-briefing-room/news/414715-arizona-man-pleads-guilty-to-using-scam-pacs-to-defraud-donors

[3] https://capitalresearch.org/article/caveat-donator-part-1/

[4] https://www.vpap.org/offices/governor/elections/?year_and_type=2013regular

[5] https://www.opensecrets.org/news/2018/03/pac-raised-over-2-million-for-sheriff-clarkes-nonexistent-senate-run/

[6] https://www.washingtonexaminer.com/fec-says-its-powerless-against-scam-pacs-that-may-have-cost-allen-west-his-seat

[7] https://www.npr.org/2019/03/21/705594068/federal-court-ruling-may-open-the-door-to-more-scam-pacs

[8] https://publicintegrity.org/federal-politics/scam-artist-who-started-pro-sanders-super-pac-sentenced-to-prison-on-federal-fraud-charges/

[9] https://www.nbcnews.com/politics/justice-department/california-man-set-bogus-websites-bernie-beto-defraud-donors-prosecutors-n985036

[10] https://www.axios.com/david-bossie-donald-trump-investigation-presidential-coalition-040bec33-5aea-44ea-864a-0bcd877719ea.html

[11] https://www.axios.com/david-bossie-donald-trump-investigation-presidential-coalition-040bec33-5aea-44ea-864a-0bcd877719ea.html

[12] https://www.vanityfair.com/news/2019/05/david-bossie-donald-trump-fundraising-scam-accusation

[13] https://campaignlegal.org/update/how-presidential-coalition-has-capitalized-its-leaders-ties-president-and-misled-donors

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