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Correction to This Article
This article on fundraising by Linda Chavez and her family incorrectly described the circumstances surrounding her withdrawal from consideration as labor secretary. She withdrew after news reports said that she housed an illegal immigrant.
In Fundraising's Murky Corners
Candidates See Little of Millions Collected by Linda Chavez's Family

By Matthew Mosk
Washington Post Staff Writer
Monday, August 13, 2007

Linda Chavez rose to prominence in the 1980s as a tart-tongued Reagan administration official and candidate for the Senate, eventually becoming a well-known Latina voice on social issues and President Bush's choice to lead the Labor Department. With her conservative celebrity came book deals, a syndicated column, regular appearances on the Fox News Channel -- and a striking but little-known success at political fundraising.

In the years since she was forced to pull her nomination as Bush's labor secretary after admitting payments to an illegal immigrant, Chavez and her immediate family members have used phone banks and direct-mail solicitations to raise tens of millions of dollars, founding several political action committees with bankable names: the Republican Issues Committee, the Latino Alliance, Stop Union Political Abuse and the Pro-Life Campaign Committee. Their solicitations promise direct action in the "fight to save unborn lives," a vigorous struggle against "big labor bosses" and a crippling of "liberal politics in the country."

That's not where the bulk of the money wound up being spent, however. Of the $24.5 million raised by the PACs from January 2003 to December 2006, $242,000 -- or 1 percent -- was passed on to politicians, according to a Washington Post analysis of federal election reports. The PACs spent even less -- $151,236 -- on independent political activity, such as mailing pamphlets.

Instead, most of the donations were channeled back into new fundraising efforts, and some were used to provide a modest but steady source of income for Chavez and four family members, who served as treasurers and consultants to the committees. Much of the remaining funds went to pay for expenses such as furniture, auto repairs and insurance, and rent for the Sterling office the groups share. Even Chavez's health insurance was paid for a time from political donations.

"I guess you could call it the family business," Chavez said in an interview.

There is nothing illegal about running political committees the way she and her family have done, and Chavez said that none of the money has been spent for personal items and that she has done nothing wrong.

Still, Chavez Inc. offers a revealing window into a largely unregulated corner of the world of political money, where few constraints exist on spending, candidates often benefit hardly at all and groups face little accountability from donors who remain largely unaware of where their money goes.

More than 2,700 "multi-candidate committees" such as those run by Chavez and her family members are registered with the Federal Election Commission, and unlike the more conventional committees used by candidates to fuel their campaigns, the multi-candidate groups face few rules governing how they can spend money. Only about a dozen are audited each year. And they face little of the public scrutiny that confronts candidate-run committees because no opponent scours their spending reports for irregularities.

"Nobody is looking at these," said Melanie Sloan of the group Citizens for Responsibility and Ethics in Washington. "It would be nice to know if other people are doing what Ms. Chavez is doing."

Even less information is publicly available about spending by politically oriented nonprofit foundations -- such as those established separately by Chavez and her family members. The four foundations collected $1.4 million from 2003 to 2006 and paid many Chavez family members a steady salary, according to tax records.

Chavez said the goal of her fundraising committees has been to advance her political agenda and nothing more. "I have never tried to enrich myself or my family and have consistently taken salaries from my organizations that were lower than the market, with very few benefits," she said.

But the spending by Chavez PACs appears to depart from standard practices by some other issue-oriented groups, according to lawyers and ethics experts. The National Rifle Association's political committee, for instance, spent nearly a third of the $11 million it raised in the 2006 cycle on political activities, including $1.2 million in direct donations to candidates.

In the 2004 and 2006 election cycles, Chavez's anti-union PAC raised $913,469 and spent less than a fifth on political activity. The Latino Alliance raised $1.2 million and spent 3 percent on political activity. The Pro-Life Campaign Committee raised $7.7 million and spent less than 1 percent on political activity, as did the Republican Issues Committee, which raised $14.6 million, the analysis found. Most of the money came from small donors.

The amounts the PACs spent on telemarketing could not be readily tallied. But an FEC investigation of the Pro-Life Campaign Committee turned up documents showing that the Arizona telemarketing firm Capitol Communications regularly retained as much as 95 percent of the money it collected, to cover its fundraising expenses. Chavez's husband, Christopher Gersten, said the firm handled fundraising for the Republican Issues PAC in the same manner.

Over the past five years, Chavez's family members have been directly paid $261,237 from the PACs, according to FEC reports. In 2001, the PACs paid Christopher Gersten $77,190, her son Pablo $25,344 and her son David $9,687.

Chavez and her immediate family members also earned income from executive positions they held in their nonprofit foundations, such as One Nation Indivisible and Stop Union Political Abuse. Her salary from her Center for Equal Opportunity foundation ranged from $125,000 to $136,250 between 1997 and 2003 and was $70,313 in 2004, the last year for which records are available.

The foundation paid her son David $83,200 in 2004 as its vice president for development. From 1998 to 2001, Christopher Gersten was paid $64,000 a year from another family foundation, the Institute for Religious Values.

Donors Unaware

Several of those who donated to the Pro-Life Campaign Committee, run by Pablo Gersten, said they were surprised to learn how little of the money was spent where they expected. David Barnes, 45, a typesetter from Williston, Tenn., gave the group $500 in February 2006, figuring "the money would go to back candidates who are pro-life."

"I'm appalled," Barnes said. "I try to be a responsible giver. I'm aware that with many charities you have to be careful. I knew better. I contributed based on an outward appearance and didn't do my homework."

Chavez and her husband began operating their first political organizations in the 1980s. They had met in college and moved to Washington, where Chavez worked for the House Judiciary Committee and Gersten was an intern and then the national director of the voter registration arm of the AFL-CIO. At 29, Gersten became the political director of the Operating Engineers International Union and helped build it into a powerhouse.

"I wrote the book on unions using the 'check-off' so their dues could be directed to political giving," he said in an interview.

Chavez was the staff director of the U.S. Commission on Civil Rights under President Ronald Reagan from 1983 to 1985, giving her a prominent platform to talk up traditional family values, to criticize affirmative action and to debate comparable pay for men and women. Gersten, meanwhile, became political director of AIPAC, the powerful pro-Israel political committee.

In 1986, Chavez unsuccessfully ran for the Senate on the Republican ticket in Maryland. By then, Gersten had launched a nonprofit group to build ties between Republicans and Jews and a second one to promote reform of the criminal justice system. The latter failed, Gersten said. "I was very amateurish."

A Religious Turn

The family took a break from politics when Bill Clinton was elected president, briefly operating a Mexican restaurant in Gaithersburg called the Santa Fe Express, with Chavez taping television interviews on politics during the day and working the cash register at night. The restaurant went broke. As Gersten recalls it, that was around the time the "partial birth" abortion issue attracted attention.

"I became a point man to organize the Jewish community on that issue," he said. "I knew enough about the Jewish law to understand that it does not allow for a late-term abortion. I got 250 rabbis to sign statements to support the ban on partial-birth abortion and made a lot of good friends in the pro-life movement."

This led him to launch the Institute for Religious Values. Soon after, Pablo Gersten started the Pro-Life Campaign Committee. Christopher Gersten said he drafted solicitations in his kitchen and then, using a small vendor in Purcellville, experimented with mailings. "I couldn't afford to rent lists of 5,000 names, so I got the list vendors to send lists of 2,000 names. I realized I could do this," he said.

Gersten was appointed as a mid-level official in President Bush's Health and Human Services Department and paused his political work. But in 2001, during the period after Chavez's failed nomination to be Bush's labor secretary, the family's political activity thrived. It founded three more PACs -- the Republican Issues Committee, Stop Union Political Abuse and the Latino Alliance -- all to pursue political agendas that had become the foundation of the family members' advocacy careers.

The groups hired direct-mail and telemarketing firms based in Mesa, Ariz., and made solicitations nationwide for each of the PACs. The letters were often strident in tone. One that Chavez sent in 2003 seeking contributions for the Stop Union committee promised that the group would help pass the "Workers' Freedom of Choice Act."

"If we stop now," she wrote, "the terrorists win."

Prospecting on such a scale can be expensive. Lawrence M. Noble, a former general counsel of the FEC, said a new organization looking for donors might choose to plow most of its money back into the fundraising operation but more established ones would not. "Generally the way it works is your initial costs are very high. You're developing a donor base. But as that stabilizes, your costs are supposed to go down," he said.

Authorities' Scrutiny

Over the past two years, the FEC has fined three of the Chavez family PACs a total of $262,500 for repeatedly failing to file timely reports and for not promptly disclosing all the money raised and spent. Chavez notes that the FEC found no intentional wrongdoing.

The Pro-Life Campaign Committee also briefly attracted the attention of state authorities. In 2003, recipients of its phone solicitations in Kansas complained about pushy telemarketers. "They were very aggressive -- pushing for automatic withdrawals from a credit card," said Mary Kay Culp, executive director of the group Kansans for Life, which received complaints from its members.

The Kansas attorney general brought a civil case against Pablo Gersten and the group, alleging that it had engaged in "deceptive solicitation." Gersten denied the allegations, and the case was dismissed three months later. A spokeswoman for Attorney General Paul J. Morrison declined to comment.

Chavez and her husband said the fundraising committees have been productive for their political causes. The Latino Alliance, for instance, "did lots of telephone calls in the 2004 elections," she said. "I believe we did some radio ads. We did outreach into the Latino communities to try and mobilize more pro-Republican votes."

That's the whole point, Christopher Gersten said in a separate interview. "The PACs help Linda and me have a voice. To have a voice in politics in today's world, you really want to be able to leverage the money that you give," he said.

As for why so little of the money wound up with candidates, Chavez said that is simply a reality of the fundraising business. The groups were not formed to make her family wealthy, she said, adding that if she or her husband were to join a K Street firm "to do some of what we have been doing on our own, we would make far more money."

Staff researchers Madonna Lebling and Derek Willis and staff writer Jonathan Mummolo contributed to this report.

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