Tea-Leaves, Tea Parties and Not Baking Cookies
Many of us vividly recall President Obama’s 2010 State of the Union Address (“SOUTU”), when he criticized the Supreme Court’s decision in Citizens United v. FEC—especially the unusual scene of Justice Samuel Alito shaking his head in disgust while mouthing, “Not True! Not True.”
The specific line of the SOTU that Alito was reacting to was President Obama’s claim that Citizens United would allow “foreign corporations” to make “virtually unlimited” contributions to American political campaigns. Of course, Justice Alito was correct about what the law was. But the Washington POST last week showed that President Obama was not completely wrong about the practical ability of “foreign corporations”—and even foreign governments, to make contributions influencing U.S. politics. What was surprising was the subject of the POST’s investigative report: likely Democratic Presidential candidate Hillary Rodham Clinton and the Clinton Foundation (See: “Clinton’s foundation has raised nearly $2 Billion—and questions” in The Washington POST, February 18, 2016; See also: Gabriel Debenedetti, “Clinton’s Foundation to reconsider donations from foreign governments—if she runs,” in POLITICO, February 19, 2015). The POST detailed how the charity that now bears Bill, Hillary & Chelsea’s name has built and maintained a standby-political organization and donor lists of mega-donors who might be trying to curry favor with the next President—including “foreign” corporations and governments. The former Secretary of State, U.S. Senator, and First Lady has not “stayed home and baked cookies and had teas” as she once declaimed as how she had made a fortune in commodities trades—she’s been “Dialing for Dollars” to the world’s wealthiest “1 Percenters.”
The misuse of tax exempt foundations as ‘fronts’ for political activities was the supposed reason for the IRS scrutiny of “Tea Party” groups in advance of the 2012 elections. It was also the reason the IRS published a proposed Rulemaking on 501(c)(4) organizations last year—that they have now withdrawn, at least for the time being. But it turns out that the IRS and Obama Administration had a reason to be suspicious that the Tea Party might be using charities to hide campaign work, because that was what those then in the government would do if they can!
The Washington POST exposé on the Clinton Foundation’s overlap with political fundraising is just the third-peg in as many weeks of attention being paid to campaign finance scandals suggesting greater attention by the FEC and IRS. In early February, POLITICO published a series of front-page exposés on what it termed, “Scam PACs”—a growing problem primarily on the right, where unscrupulous organizers create a Super PAC, rent a fundraiser's mailing-list to collect contributions, and consume virtually all of the donations themselves by generating management and legal fees (See: “The Rise of Scam PACs,” in POLITICO, et al.).
Now, the FEC has secured a conviction against a conservative activist who had engaged in “illegal coordination” of various “independent expenditure” committees with an unsuccessful Congressional campaign he managed—and used one of those Scam PACs to pay his Mom for services she did not perform, but ‘rebated’ to him (See:Emily Kahn, “GOP Operative Pleads Guilty to Illegal Coordination, Making False Statements to FBI,” in ROLLCALL Manazine, on-line report February 8, 2015).
Perhaps it is because I was stuck in traffic today momentarily blocking the garage where Watergate’s “Deep Throat” told the Washington POST’s investigative reporter to “Folloooh, the Money” in the scene made famous by Robert Redford and Hal Holbrook, but I see something converging—if not an actual ‘conspiracy.’ In short, these are Tea-Leaves that should cause tax exempt organizations and political committees to not only ‘double-check’ that they are in compliance with applicable laws, but also to perform “due diligence” and ‘conflict checks’ on their staffs, consultants, and vendors. If they don’t, they may be spending all of their time and money trying to keep out of jail—or at least the newspapers, for all the wrong reasons.