Campaign Finance Gets New Scrutiny

Barack Obama's unconventional fundraising success, many experts say, could transform the campaign finance system, though it also raises new questions.
Barack Obama's unconventional fundraising success, many experts say, could transform the campaign finance system, though it also raises new questions. (By Nikki Kahn -- The Washington Post)
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By Matthew Mosk
Washington Post Staff Writer
Sunday, October 26, 2008

Sen. Barack Obama's record-breaking $150 million fundraising performance in September has for the first time prompted questions about whether presidential candidates should be permitted to collect huge sums of money through faceless credit card transactions over the Internet.

Lawyers for both the Republican and Democratic parties have asked the Federal Election Commission to examine the issue, pointing to dozens of examples of what they say are lax screening procedures by the presidential campaigns that permitted donors using false names or stolen credit cards to make contributions.

"There is so much money coming in and yet very little ability to say with certainty that you know who is giving it," said Sean Cairncross, the Republican National Committee's chief counsel.

While the potentially fraudulent or excessive contributions represent about 1 percent of Obama's staggering haul, the security challenge is one of several major campaign-finance-related questions raised by the Democrat's fundraising juggernaut.

Concerns about anonymous donations seeping into the campaign began to surface last month, mainly on conservative blogs. Some bloggers described their own attempts to display the flaws in Obama's fundraising program, donating under such obviously phony names as Osama bin Laden and Saddam Hussein, and reported that the credit card transactions were permitted.

Obama officials said it should be obvious that it is as much in their campaign's interest as it is in the public's interest for fake contributions to be turned back, and said they have taken pains to establish a barrier to prevent them. Over the course of the campaign, they said, a number of additional safeguards have been added to bulk up the security of their system.

In a paper outlining those safeguards, provided to The Washington Post, the campaign said it runs twice-daily sweeps of new donations, looking for irregularities. Flagged contributions are manually reviewed by a team of lawyers, then cleared or refunded. Reports of misused credit cards lead to immediate refunds.

In September, according to the campaign, $1.8 million in online contributions was flagged, and $353,000 was refunded. Of the contributions flagged because a foreign address or bank account was involved, 94.1 percent were found to be proper. One-tenth of one percent were marked for refund, and 5.77 percent are still being vetted.

But clearly invented names have been used often enough to provoke an outcry from Republican critics. Donors to the Obama campaign using false names such as Doodad Pro and Good Will gave $17,375 through 1,000 separate donations, with no sign that they immediately tripped alarms at the campaign. Of more concern, Cairncross said, are reports that the campaign permitted money from 123 foreign nationals to enter its accounts.

Obama officials said they have identified similar irregularities in the finance records of their Republican rival, Sen. John McCain. "Every campaign faces these challenges -- John McCain's campaign has refunded more than $1.2 million in contributions from anonymous, excessive and fraudulent contributors -- and we have reviewed and strengthened our procedures to ensure that the contributions the campaign accepts are appropriate," said Ben LaBolt, an Obama spokesman.

McCain's contributor database shows at least 201 donations from individuals listing themselves as "anonymous" or "anonymous anonymous," according to Obama's campaign. In one particularly embarrassing episode, the McCain campaign mistakenly sent a fundraising solicitation to the Russian ambassador to the United Nations.

Rather than relying primarily on a network of wealthy and well-connected bundlers -- as candidates have since President Bush pioneered that technique in 2000 -- Obama also tapped a list of 3 million ordinary donors, many of whom who gave in increments of $25 and $50.

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