Vendors finesse law barring ‘coordination’ by campaigns, independent groups

October 13, 2012

Mitt Romney’s presidential campaign and American Crossroads, an allied interest group, are barred by federal law from working together on political advertising.

But it’s perfectly legal for them to hire the same company to run Internet ads. That company uses some of the same employees to represent the two clients, and the same databases to store information on people it will target with ads.

By all accounts, Romney’s campaign and the group spending millions of dollars on his behalf are not violating the law that prohibits campaigns and independent organizations from coordinating their efforts.

The law was meant to separate campaigns from outside groups with wealthy donors — the theory being that large political contributions could have a corrupting influence on candidates.

But it is a fuzzy line that separates the campaigns from groups such as Crossroads and the super PACs that have sprung up in the wake of a 2010 Supreme Court decision that allowed unrestricted corporate spending on campaigns. And the 2012 campaign, with its surge in spending from independent groups, offers many examples of how little the law actually prohibits when it comes to “coordination.”

Who’s buying political ads in the presidential campaign?

The major super PACs helping President Obama and Romney, for example, were formed by men who previously worked as aides to the candidates.

And at least 30 political consulting companies have been hired by both a campaign or party and an independent group, according to campaign disclosure reports. The consultants provide a range of services, from polling to legal advice to media consulting.

The Democratic Congressional Campaign Committee shares 10 vendors with the major super PAC helping Democrats win House races, the House Majority PAC. The super PAC, for example, paid $31,000 to Ralston Lapp Media to produce television ads, while the DCCC paid $173,000 for the same purpose. Nine Democratic congressional candidates also hired the company.

Contributions to candidates are capped at $2,500 for each election, but for many types of interest groups, there are no restrictions on donations. In order to prevent the groups from becoming de facto extensions of the campaigns, they are prohibited from spending money at the request of candidates or using inside knowledge of their strategies or wishes. But hiring a firm that works for both sides is legal as long as information is not shared.

Advocates for tighter restrictions on political money say the weakness of the law has allowed interest groups to essentially become another arm of the campaigns.

“The real scandal in 2012 is what’s legal,” said Paul S. Ryan, a lawyer with the Campaign Legal Center, which supports tightening campaign finance laws. “Certainly the law does not prevent coordination in the way that word is generally understood by the public.”

Over the past decade, more than 30 complaints of alleged coordination in federal races have been brought to the Federal Election Commission. But the complaints rarely prompt investigations because of the difficulty of collecting private communications that might prove coordination.

One example of vendors work with SuperPACs and campaigns.

The high-tech realm of online ad targeting offers a new example of how tightly integrated campaigns and interest groups can become.

Romney’s campaign has bought $21 million in online advertising through an Alexandria-based ad agency called Targeted Victory, the same firm hired by American Crossroads to run $1 million in ads. The company spends most of that money buying space on the Web through ad networks.

The company also works for the Republican Party, prominent Republican House and Senate candidates, and interest groups active in congressional races, including the American Action Network, Americans for Prosperity and Crossroads GPS, which is affiliated with American Crossroads.

Targeted Victory uses Internet video ads to persuade people to oppose Obama and vote for Romney. It also uses a stockpile of data it has collected on Web users to reach them with ads for both Romney and Crossroads.

Separately, Targeted Victory keeps a record of those who have visited the Romney campaign Web site or the Crossroads site, and stores that information in the same location.

Romney campaign spokeswoman Andrea Saul said the campaign’s vendors “understand the law and follow it.”

Targeted Victory’s chief executive, Michael Beach, said in an e-mailed statement that the company has separate teams of strategists for the two clients, crafting ad messages and finding potential voters online. Those teams work on opposite sides of a “firewall” described in FEC regulations, he said.

“Targeted Victory takes its compliance responsibilities seriously and continually reviews its operations to ensure compliance with the FEC rules,” Beach wrote.

He said the rules allow some employees to work for both Romney and Crossroads, including “personnel who merely forward the Internet ad buys to placement firms.”

FEC regulations specifically point to those working on “the selection or purchasing of advertising slots” as employees with the potential to share inside information that could be used for coordination.

A look at the same custom-built software running on the Romney and Crossroads Web sites shows the tight links between the organizations. When people visit the Romney or Crossroads site, their browsers download software written by Targeted Victory.

The code creates a trigger so that when users press a “donate” button, for example, their browsers report that information, which is kept in a database that commingles Romney and Crossroads users.

When users move on to a site with ads, that starts another chain reaction of code, transmitting the Romney and Crossroads information to ad networks, which may then display Romney or Crossroads ads.

Storing data together and using the same employees to represent Romney and Crossroads is not coordination under the law. To break the rule, an interest group would have to use inside information on the candidate’s needs or wishes to shape its own ad campaign.

Geoff Garin, a Democratic pollster who works for prominent liberal super PACs, said he uses a password-protected computer system to keep sensitive materials from his colleagues who might work directly for candidates or the official party committees. He praised the value of the rules as one of the only defenses keeping the work of candidates and well-funded interest groups separate.

“It seems we have a Swiss-cheese system here,” Garin said. “No offense to Swiss cheese.”

Dan Eggen contributed to this report.

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