What was behind Rooney’s claim that Clinton’s 2016 presidential campaign possibly received millions in illegal money? It was the first time a member of Congress had referred to a Federal Election Commission complaint lodged by a pro-Trump super PAC against Clinton and most state Democratic parties.
In the complaint, the Committee to Defend the President asked the FEC to determine whether the defeated Democrat engaged in “unprecedented, massive, nationwide multimillion-dollar conspiracy” to allow large donors to spread more money around. The “conspiracy,” however, may have simply taken advantage of new loopholes in campaign finance law — loopholes expanded after a Supreme Court victory by the lawyer who filed the new complaint.
The story starts in 2012, when Republican donor Shaun McCutcheon sued over FEC regulations that limited how much money donors could give to parties and candidate, in total, in any campaign cycle. McCutcheon’s case made it to the Supreme Court in 2013, where defenders of the FEC limits failed to convince the court’s conservative bloc that lifting the limit would allow candidates to blow past their own donation limits by routing more money through state parties.
“How realistic is that?” asked Justice Samuel Alito during oral arguments. “How realistic is it that all of the state party committees, for example, are going to get money and they’re all going to transfer it to one candidate?”
In the end, it was very realistic. In 2016, Clinton’s campaign created a Hillary Victory Fund — a joint fundraising committee — that allowed the candidate to raise money for both her campaign and 32 state parties at the same time. Donald Trump’s campaign did the same, albeit with fewer state parties. During the campaign, neither move courted much controversy.
After the campaign, the dam broke. In October, former Democratic National Committee chair Donna Brazile began releasing excerpts from her memoir “Hacks,” in which she described a DNC that was effectively run “from Brooklyn” — i.e., by Clinton’s campaign. Brazile’s criticisms got noticed by Dan Backer, who’d won McCutcheon’s case at the Supreme Court, and who happened to be the attorney behind the Committee to Defend the President. Donors who had given to the Hillary Victory Fund, whose money had been “earmarked” to elect Clinton, had, he argued, been part of a laundering scheme.
“The DNC, in turn, contributed most of those funds to HFA, made coordinated expenditures with HFA and otherwise transferred control of its money to HFA, as both the DNC’s own public filings and former DNC chairwoman Donna Brazile’s public confessions make clear,” Backer wrote in the complaint. “In McCutcheon v. FEC, 134 S. Ct. 1434, 1455 (2014), the Supreme Court itself recognized this precise arrangement would flatly violate federal earmarking restrictions, … though the court dismissed the possibility of such a flagrantly illegal scheme as ‘unlikely’ to occur. Not even the Supreme Court could anticipate the extent to which the Democratic Party and its elite, wealthy donor class would commit willful felonies in a futile attempt to facilitate Clinton’s election.”
Democrats, meanwhile, basically ignored the story. Reached for comment, several state party chairs — all of their state parties having been named in the complaint — said they were unaware of it. In the weeks since Brazile’s book was released, state Democratic Party chairs have criticized the 2016 funding arrangement; none thought it was illegal.
In an email, Backer argued that the complaint rested entirely on what Democrats had said and done about the JFC.
“If state parties never had any actual custody or control, the ‘allocation’ of funds to them was never a contribution to them, but rather an attempt to paper the funds through strawmen on the way to the DNC, where the funds were placed under the control of Team Clinton in Brooklyn,” Backer wrote. “Thus, the $300,000(ish) from Calvin Klein was not a contribution to each of the participating entities, but rather an excessive contribution to at least the DNC, and since they took that money and put it under the custody and control of Team Clinton, it is an excessive contribution to the campaign. If that’s how it was pitched to donors (I’ll bet you a steak dinner on that one), those doing the pitching violated federal law.”
Democrats have, by and large, declined to comment about Backer’s complaint. Campaign finance watchdogs, however, believe that the pro-Trump super PAC may be on to something. Paul S. Ryan, a vice president of Common Cause who works on campaign finance issues, said that “the possibility of this type of scheme was why I was critical of McCutcheon in the first place,” and that some type of probe into practice of new, larger joint fundraising agreements might have been inevitable.
“In my view, the complaint does show enough smoke to warrant investigation into whether there was a fire,” said Ryan. “It would be good to get some guidance from the FEC on this. Either way you cut the Backer complaint, this is either illegal activity, or it’s legal but troubling.”
Campaign finance watchdogs had been waiting for a tough examination of the donor pools created in 2016. It’s unclear how long it might take the FEC to dig in; it took years after the 2008 and 2012 cycles for the commission to levy fines against the campaigns of John Edwards and Mitt Romney.