Mitt Romney — July 19, 2011 at 12:26 pm

Mitt Romney’s state PACs raise unlimited funds then funnel them back to the nat’l campaign


This week, the Alabama and New Hampshire Democratic parties filed a complaint (pdf) against the Romney campaign, claiming that he is using lax rules in various states to raise money and then funnel them back to his national campaign.

To make a long story short, Romney’s campaign is using these state PACs to accept contributions in excess of the federal limit, is using money supposedly raised for state elections to influence a federal election, and — even now that Romney is an official candidate, numerous media outlets have questioned the practice, and a complaint has been filed with the FEC — they are still doing it. Even more troubling, Romney’s Alabama PAC will not have to disclose its spending until January 31, 2012. Laying aside possible violations of the law, Romney’s financial finagling through state PACs will be invisible to early state primary voters. So much for the transparency and adherence to the letter of the law Republicans pretend to love.

The Alabama PAC donations are the most egregious.

Romney’s national PAC, The Free and Strong America PAC, is what they call in Washington a leadership PAC. Such PACs are routinely used by Republicans and Democrats, separate from their own election accounts, to raise money to give to other candidates. But individual donations to it are limited by federal law to $5,000.

Alabama law does not limit the amount individual donors can drop into PACs. Since 2006, the money held in the Alabama affiliate of Free and Strong America PAC has been paying staffers, pollsters, consultants and regular bills associated with what became an official campaign operation. Federal election rules have allowed the arrangement in past cycles, and this one is no different.

“They basically very carefully dance around ever saying they’re a candidate, when everybody and their dog knows they’re running for president,” said Dave Vance, a spokesman for the Campaign Legal Center, a nonpartisan Washington think tank. “It’s a complete violation of the spirit of the law and it’s a pathetic problem. Alabama is fertile ground because they can take the money in large chunks.”

The New York Times has more:

Upon closer inspection, though, Mr. Romney’s interest in Alabama snaps into focus. The state has among the most permissive campaign finance rules in the nation, allowing contributions of unlimited size from individuals and corporations.

As a result, the Alabama affiliate of Mr. Romney’s federal PAC, Free and Strong America, has raised more than $440,000 this year, with many of the contributions amounting to tens of thousands of dollars each.


Yet it has donated $21,500 — less than 5 percent of what it has raised — to state and local candidates in Alabama, for which these state PACs are ostensibly intended. (The PAC also contributed $3,500 to Nikki Haley’s successful campaign for governor in South Carolina.)

Instead, a vast majority of the just over $300,000 Mr. Romney’s Alabama PAC has reported spending this year has been directed back to the Boston headquarters of Free and Strong America, paying for, among other expenses, a significant part of the salaries of Mr. Romney’s political staff, who will almost certainly form the core of his presidential campaign if he decides to run.

So, he’s raising money at the state level and then funneling that money back to his national campaign, skirting national election laws. It’s even happening in my home state of Michigan.

Again, from the New York Times:

[R]oughly half the salary of Eric Fehrnstrom, a senior adviser to Mr. Romney who was his traveling press secretary in his 2008 presidential run, is paid for by the federal PAC, while the rest is divided up by the state-based PACs Mr. Romney has set up in Alabama, Iowa, Michigan, New Hampshire and South Carolina.

Not surprisingly, the PACs in the three states that do not cap donations to these kinds of organizations — Alabama, Iowa and Michigan — pay the largest parts of Mr. Fehrnstrom’s salary, as well other expenses of the federal committee, with the Alabama PAC assuming the biggest share.

The Democratic parties in New Hampshire and Alabama are pushing back. From their press release:

“We call on all the relevant state and federal election commissions to take a close look at potential wrongdoing by Mitt Romney and his campaign organization,” said Judge Mark Kennedy, chair of the Alabama Democratic Party. “It is important that candidates follow the law and it appears that Romney’s campaign may be using funds collected here in Alabama to aid his presidential campaign. Furthermore, it’s a disgrace that Alabama Lieutenant Governor Ivey would involve herself in a campaign that uses relaxed Alabama law to potentially violate federal campaign law.”

The amended complaint, which has also been sent to state authorities and seeks a full inquiry into the violations of both Federal and state laws, raises two major areas of concern:

  • Romney’s campaign may have violated federal and state laws in Alabama, New Hampshire, Iowa, South Carolina, and Michigan by raising “soft money” contributions into State PACs and using the money to support his presidential candidacy.
  • If the State PACs raised or spent soft money after Mr. Romney became a declared candidate, Mr. Romney committed an additional violation of federal law. Federal law prohibits entities “established” by federal candidates from raising or spending any “soft money.” Romney clearly established these PACs and, thus, they are subject to this law. To sever ties with the PACs and escape liability for their raising and spending of “soft money,” the candidate must have no material contact or involvement with the PAC for fully two years. Of course, Romney can not satisfy this two year standard. Nor has he even suggested that he could.

Especially troubling to early state primary voters, the Romney campaign may not be required to disclose his Alabama state PAC spending until January 31, 2012. By January 31, 2008, the GOP presidential contest was nearly settled.

“It is important that voters know that their candidates are playing by the rules,” said Ray Buckley, chairman of the New Hampshire Democratic Party. “Romney should voluntarily disclose exactly how the money raised in Alabama is being spent.”

I’ll say this much. When Mitt Romney says he’s a businessman, it’s clear he’s not kidding. Exploiting loopholes to evade the law is exactly how businesses operate to maximize profits. So much for that self-proclaimed Republican integrity.