A Tale of Two FEC Cases

There are two complaints pending before the Federal Election Commission that contain allegations of major campaign finance violations during the 2016 election. One of them has received wall-to-wall coverage in the national media, but the other has been unjustifiably ignored by most of the national press.

The first—and much more ballyhooed—case involves an alleged hush payment by the Trump campaign in the final days of the 2016 presidential election. In January Common Cause filed a complaint with the Justice Department and the Federal Election Commission asking them to investigate an alleged $130,000 payment by Essential Consultants LLC to an adult-film actress named Stephanie Clifford (a.k.a. “Stormy Daniels”) in October 2016. Common Cause alleges that there is “a reason to believe” that the payment to Clifford was in fact an unreported, in-kind contribution to Donald Trump’s presidential campaign.  According to the complaint, “[t]his payment of $130,000 was part of an agreement by which Ms. Clifford [a.k.a. Stormy Daniels] would be precluded from publicly discussing alleged sexual encounters between her and Mr. Trump.” 

The whole case comes down to a matter of suspicious timing. Relying on media reports, Common Cause alleges that Michael Cohen, Trump’s attorney, established Essential Consultants LLC on October 17--three weeks before the presidential election. Moreover, the payment from Essential Consultants LLC came at a time when there was a possibility that Clifford would be interviewed about her Trump connection on ABC's Good Morning America program, an interview that ultimately never took place.  Common Cause points to the circumstances surrounding the payment's timing as evidence that it was made with the purpose of influencing the 2016 election by squelching a story damaging to the Trump campaign. 

Not surprisingly, the Stormy Daniels story has generated a huge amount of coverage in virtually every major news outlet, including the Wall Street Journal, the Associated Press, ABC News, CBS News, NBC News, Politico, Slate, The Atlantic, the Washington Post, and the New York Times, among many others. 

Although the media has focused on the salacious nature of the story, the Common Cause complaint alleges 3 potential campaign finance violations:

• First, federal law requires that all receipts and disbursements on behalf of campaigns must be reported to the FEC (52 U.S.C. § 30104(b)), which means if the $130,000 check constituted a campaign contribution and expenditure, then the failure to report it violated the law. 
• Second, federal law prohibits corporations from making contributions to political campaigns (52 U.S.C. § 30118(a)). If the true source of the funds was the Trump Organization—as Common Cause suggests—then it would constitute an illegal corporate campaign contribution.
• Third, even if the money came from a legal source (i.e. a non-corporate and non-foreign source), it far exceeded the $2,700 per election limit on individual contributions to federal candidates (52 U.S.C. § 30116(a)(1)(A)). The exception, of course, is if Trump used his own personal funds, as there is no limitation on candidate contributions to their own campaigns (and FEC records already show that Trump spent $66 million of his personal fortune on the campaign). But even so, if Trump paid Clifford from his own bank account, he was required by law to disclose the contribution and expenditure to the FEC.

But the case is far from a slam dunk. Proving that the payment was made for the "purpose of influencing" the election will be a challenge for prosecutors. For example, in 2011 the Justice Department unsuccessfully pursued a similar case against former Senator John Edwards. Prosecutors accused Edwards of using campaign contributor funds to conceal a relationship with his mistress during the 2008 presidential race. The case fell apart when the government failed to prove the payments to the mistress were made to influence the election.

However, as Thomas Frampton recently argued on the Harvard Law Review blog, there are some key factual differences between the Stormy Daniels and John Edwards cases. For example, Frampton points out that federal prosecutors offered no evidence that Edwards’ mistress had threatened to go to the press, and, crucially, most of the payments were made after Edwards dropped out of the 2008 race. Moreover, Edwards had a close friendship with the donors, and therefore, as Frampton explains, the donors may have had a personal--rather than political--motive for “helping their friend Edwards conceal the affair from his cancer-stricken wife.”

In contrast, Common Cause alleges that the payments to Clifford came just days before the election, and were made in response to the threat that Daniels was about to speak to the press. Hence, the possibility that the payments were made for the "purpose of influencing" the election is strong enough to justify FEC and DOJ investigations. The Stormy Daniels story thus merits the news coverage it has received.

But so too does a complaint that has inexplicably flown under the radar screen for months. In November 2017, the Committee to Defend the President filed a complaint with the FEC alleging that Hillary Clinton’s presidential campaign conspired with the Democratic National Committee and at least 34 Democratic state parties to circumvent federal contribution limits.

According to the complaint, Clinton’s joint fundraising committee (“Hillary Victory Fund” or “HVF”) laundered over $80 million in contributions through the state parties to the DNC, which then secretly coordinated its 2016 election expenditures with the Clinton campaign.

Campaign finance allegations against the Clintons are certainly not new, but two things make this complaint particularly interesting.

First, the FEC’s campaign finance website—a tremendous resource that records and publicly displays all federal campaign contributions over $200—appears to provide circumstantial evidence to support at least an inference of coordination between and among the various Democratic party organizations. As the complaint argues: 

“The uniformity, regularity, magnitude, immediacy, and extent of these reported transfers—every single state party transferring every single disbursement it received from HVF [the Clinton joint fundraising committee], in its entirety, exclusively to the DNC, immediately upon receipt—inexorably leads to the compelling inference, supported by public statements, HVF’s members had an understanding or agreement to automatically funnel funds they received through HVF to the DNC.”

The complaint further points out:

“Based on the eerily precise timing of these hundreds of transactions involving dozens of entities over more than a year. . . . it appears HVF may have transferred contributions it received directly to the DNC, and the entities involved falsely reported intermediate transfers that never occurred.”

The complaint includes screen shots taken directly from FEC public reports that certainly appear to show a highly suspicious sequence of massive, virtually simultaneous financial transfers from the Clinton joint fundraising committee to the state parties to the DNC. 

The complaint alleges a number of potential campaign finance violations, including failure to comply with mandatory disclosure laws, accepting contributions in the name of another, false or inaccurate reporting, illegal earmarking, and, most important of all, circumvention of federal contribution limits. Moreover, the money involved in the DNC case--a total that exceeds $80 million--vastly surpasses that of the Stormy Daniels case, which "only" involves a payment of $130,000. 

The second thing that distinguishes the complaint is the fact that it relies on statements that Donna Brazile, the former DNC chairperson, made in her new book. According to Brazile, the Clinton campaign did indeed coordinate—and, in fact, exercised almost complete control over—the DNC’s campaign expenditures during the 2016 campaign. In her book she writes that a secret agreement between Clinton’s campaign and the DNC provided that “Hillary would control the party’s finances, strategy, and all the money raised. . . .  The DNC also was required to consult with the campaign about all other staffing, budgeting, data, analytics, and mailings.”

Brazile may not have realized the legal significance of that paragraph when she wrote it, but the Committee to Defend the President certainly does. The committee quotes Brazile in their complaint. Brazile's allegation that the DNC and the state Democratic parties were a financial puppet of the Clinton campaign is, if true, a potential blockbuster revelation when combined with the strange financial transactions between the joint fundraising committee, the state parties, and the DNC.

Of course, many questions remain. For example, was the intent of the transfers to circumvent campaign contribution limits? Did the contributors to the Clinton joint fundraising committee know that the money would ultimately all end up with the DNC? Did the contributors know that the DNC's funds would be controlled by the Clinton campaign? And how much money did individual contributors actually make to Clinton's joint fundraising committee?  

We don't have answers to those questions yet. But in any event, the case deserves far more attention than it has thus far received from the national media. FOX News has covered the story, and in December the Washington Post published one article on the Committee to Defend the President’s FEC complaint. Ironically, the Washington Post article made note of the lack of mainstream media coverage of the complaint. 

Whether the Committee to Defend the President’s allegations ultimately hold water remains to be seen. But they deserve at least as much media coverage and investigation as the Stormy Daniels story. 

 

Comments

[Enrique Guerra Pujol]

Hypothesis: Maybe "liberal media bias" is a thing ...

[anon]

Wow, a report that is "fair and balanced."

Well f'ing done.