Super PACs Use New Trick to Hide Donors

At least Two Dozen super PACs that spent Millions of Dollars in recent Elections used Loopholes to get out of revealing their Donors, according to Information compiled by the Campaign Legal Center.

Mere days after it sprang to life in a burst of Paperwork, the New super PAC Red and Gold spent nearly $1 Million attacking Rep. Martha McSally, a Battleground GOP Senate Candidate favored by Majority Leader Mitch McConnell. But first, Red and Gold took a step to Hide its Tracks. Red and Gold sent a brief Note to the Federal Election Commission (FEC) informing Regulators that it would file Monthly Reports showing who Financed the Group. Its first Disclosure “will be due on September 20,” the super PAC wrote, more than Three weeks after McSally’s Arizona Republican Primary is over.

It wasn’t the first super PAC to pull that Trick: The scheme is part of a sharp Escalation in super PACs avoiding Reporting Requirements and keeping Voters in the dark about their Funding until after Key Elections. Two other Groups aired more than $3 million in Attack Ads in West Virginia’s GOP Senate Primary this year and used the same method to Dodge the FEC until after the May 8 Vote. Overall, at least Two Dozen super PACs that spent Millions of Dollars in recent Elections used Loopholes to get out of Revealing their Donors, according to Information compiled by the Campaign Legal Center, a Watchdog Organization.

It’s a sign that Political Operatives see more Risk in Revealing the Big-Money Meddlers in Congressional Elections than in pushing the Boundaries of Campaign Finance Law, and many of the Groups pushing the Boundaries are aligned with Democrats, the Party most Associated with Complaints about Undisclosed “Dark Money” affecting Elections.

“Political operatives are finding all sorts of new ways to deprive voters from information about who is funding them when voters go to the polls on election day,” said Brendan Fischer, Director of Federal Reform at Campaign Legal Center, which recently Filed Three FEC Complaints against Misbehaving super PACs. “These operatives may view the FEC as so dysfunctional that they can ignore their most basic legal obligations and get away with it.”

The PACs’ maneuvering ranges from Legal Trickery to blatant Disregard for Campaign Finance Law. Some Groups simply did not File required Disclosures, a Clear Violation of the Law. Others only spent Money shortly before Election Day, when it wouldn’t have to be Disclosed by the time Voters headed to the Polls, which is Allowed. And once a super PAC has found a successful Strategy to Evade Disclosure without getting caught, others tend to play Copycat.

That's what happened with Highway 31, the super PAC that spent more than $4 Million supporting Democrat Doug Jones during the Contentious Alabama Special Election in 2017. In an unprecedented move, Highway 31 reported Debts to its Vendors but No Donors on its Pre-Election FEC Report, essentially, the super PAC's Ad-Makers Loaned the Group the Funds to spotlight Allegations that Republican Roy Moore had been Banned from a Shopping Mall because he made Advances toward a 14-year-old Girl. It wasn't until after Jones won that Highway 31 Revealed it was largely Funded by Senate Majority PAC, the super PAC Run by Allies of Senate Minority Leader Chuck Schumer. Chris Hayden, Spokesman for Senate Majority PAC, said that “Senate Majority PAC and Highway 31 have followed the FEC reporting schedule and follow the law governing super PACs.”

The Firms that lent Highway 31 the Funds could wind up in a bind: Under Federal Law, unless they regularly Loan super PACs Hundreds of Thousands of Dollars in Services, then they aren't allowed to give Highway 31 such Special Treatment. But no one involved in Highway 31's Activity has faced consequences, though the Campaign Legal Center did hit them with an as-yet Unresolved FEC Complaint.

This summer, another Group has taken a cue from Highway 31's Playbook: A super PAC called Ohio First supporting GOP Senate Candidate Jim Renacci has now reported having $597,104 in Debt to Consultants, Ad Makers, and Direct-Mail Firms. Because it hasn't Disclosed any Spending, Ohio First also hasn't Revealed its Donors.

In the insular world of Campaign Finance Law, Lawyers, and Operatives are quick to catch on to a New Loophole and Exploit it, said Brett Kappel, Partner at Akerman LLP. "Once [a super PAC] gets away with something, and it gets some press, they're like, 'Oh that's cool — do that!'" said Kappel.

Red and Gold, which is Run by a Democratic Operative and uses the same Media-Buying Consultant as Senate Majority PAC, is similarly following in the footsteps of the Two West Virginia super PACs that shuffled their way around Disclosure Deadlines to keep their Funders Secret. The Two West Virginia super PACs turned out to have big-name Funders of their own. One was Funded by Major Democratic Donors, while the other was Sponsored by McConnell's super PAC, Senate Leadership Fund (SLF), which funneled Money to a Group called Mountain Families PAC to Derail a bombastic Outsider, Don Blankenship. SLF wasn't revealed as the Source of Mountain Families' Funds until after Blankenship finished Third in his Republican Primary, because the PAC filed Papers to Avoid the Normal Pre-Primary Reporting Requirements for Outside Groups.

By hiding the Source of the Funds, McConnell, whose super PAC Spending became an issue when Moore Defeated his favored Candidate in Alabama's Special Primary, Avoided being Publicly tied to the Anti-Blankenship Campaign until after the Fact. While some super PACs are using Creative Methods to Evade Reporting Deadlines, others are taking a more Blunt Approach: just Ignoring them.

Ohio First, which is Registered in the State of Virginia but is Spending in the Ohio Senate Race, took another Brazen step to Conceal its Funders: It Disregarded a Key Filing Deadline for Weeks, further insulating its Donors from Discovery. That could draw a $17,000 Fine from the FEC, but the FEC has not imposed such a Fine on the Group, nor has it acted Aggressively to Levy Fines on other Groups blatantly ignoring FEC Rules.

Fischer said super PACs may start considering such Fines, if they happen, equivalent to a Small Fee for keeping their Donors Secret. "The concern would be that these committees can write off these administrative fines as a cost of doing business and a means of which they can effectively buy their way into anonymity," Fischer said.

Other Changes that would strengthen Disclosure for super PACs, such as getting Rid of the Loophole for super PACs that change their Reporting Schedule Ahead of Primary Deadlines, would likely require a Change to Law. At least 15 super PACs have meanwhile Embraced an Existing Loophole this Cycle: Waiting until a Primary Election is Two Weeks away, then Unleashing their Spending during the Final Days of the Race. By doing so they Avoid having to Disclose their Donors Two Weeks before the Primary alongside other Campaigns and super PACs.

While these so-called Pop-Up super PACs aren't Active until the Final Days of an Election, their Proprietors gather Pledges for Donations and Plan out their Spending Ahead of Time, so they can Efficiently jump into the Race. After the Election is over, such super PACs have Disclosed a range of Hidden Donors.

During the contentious Republican Primary to Replace retiring Rep. Jeb Hensarling in Texas' 5th District, a super PAC called Our Conservative Texas Future popped up and spent $100,000 ahead of the initial Primary Race, then more Funds during a Runoff successfully helping GOP Candidate and State Legislator Lance Gooden. Mailers sent by Our Conservative Texas Future warned that Gooden's Opponent in the Race would be "for sale" if she were Elected, the Texas Tribune Reported. After the Election, the super PAC's Funding Sources were Revealed: One of Gooden's biggest Donors during his Career in the State Legislature was Funding Our Conservative Texas Future, too. The Donor, Monty Bennett, “throws money at everything” and “buys folks” in Politics to get what he wants, an Area Business Owner complained to the Texas Tribune.









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