New reporting looks at how shady LLCs are contributing to ‘corrupt campaign finance system’
Campaign finance reform advocates have rallied against super PACs’ ability to influence elections since their creation in 2010, and new reporting by the Washington Post puts a spotlight on how “ghost corporations” are pumping money into these committees, with their big money contributors hiding behind a veil of secrecy.
As the Center for Responsive Politics explains: “super PACs may raise unlimited sums of money from corporations, unions, associations and individuals, then spend unlimited sums to overtly advocate for or against political candidates,” though they “are prohibited from donating money directly to political candidates.” They report their donors to the Federal Election Commission (FEC) monthly during an election year.
Corporate donations are pouring in this election season, and are poised to “exceed the $86 million they gave to super PACs in the entire 2012 presidential cycle,” the Post notes.
“Many corporate givers this cycle are well-established hedge funds, energy companies and real estate firms,” the Post reports. Indeed, a recent analysis by Reuters looked at how they are upping their game in this election season, and are on track “to more than double the amount they gave in the 2012 election campaign.”
“But,” the Post continues, “a significant share of the money is coming from newly formed LLCs with cryptic names that offer few clues about their backers.”
Reporters Matea Gold and Anu Narayanswamy explain that many of them are being formed in Delaware, “where corporations are required to reveal little about their workings.”
And they’re being created “just days or weeks before making six- or seven-figure contributions — an arrangement that election law experts say violates a long-standing federal ban on straw donors.”
One example the reporting points to is Children of Israel LLC, which was formed by a California real estate agent who listed the purpose of the LLC as “donations.” It gave Pursuing America’s Greatness, a super PAC supporting former Arkansas governor Mike Huckabee’s presidential bid, $50,000 weeks after its formation. It followed that with a $100,000 donation to the super PAC two months later, and made a $250,000 donation to the Sen. Ted Cruz-backing super PAC Stand for Truth in January.
The Sunlight Foundation also reported on this issue last month. In article entitled How super PAC donors hide behind shady LLCs, Libby Watson noted: “One of at least eight super PACs supporting Ted Cruz, Stand ForTruth (yes, it’s one word) received several donations from untraceable LLCs.”
The Huffington Post offered more on that group, reporting this week:
The CEO of Platinum Health Care — a nursing-home chain that recently settled a lawsuit alleging it stole patients’ Social Security, Medicare, Medicaid and Veterans Administration payments — is closely linked to five mysterious companies that donated $250,000 to Stand For Truth, a super PAC supporting Ted Cruz.
The five limited liability companies, which own or operate assisted living facilities for seniors, each donated $50,000 to Stand for Truth on Dec. 21, 2015. That’s the same day that Platinum Health Care — which shares the same Skokie, Illinois, address as the five LLCs — settled over allegations that CEO Ben Klein and his firms kept seniors’ government checks after they moved out of Platinum facilities or died.
FEC action on the issue of these “ghost corporations” giving to super PACS appears unlikely, the Post says, because the FEC has been “recently deadlocked on whether to even investigate such cases.”
Sarah Posner sums up the problem in her reporting, writing, “By donating to a super PAC through an LLC, donors and companies are able to buy political influence and sway elections without revealing their identities.”
Among those who’s cautioned against such influence is former U.S. President Jimmy Carter, who previously said, “We have one of the worst election processes in the world right in the United States of America, and it’s almost entirely because of the excessive influx of money.”
Presidential hopeful Bernie Sanders, meanwhile, has denounced super PACs, and said last month that the nation’s “corrupt campaign finance system is undermining American democracy.”