An ad for Hillary from Hillary Victory Foundation
Is Hillary Clinton’s campaign violating election law? I just finished reading One Pissed Off Liberal’s latest diary, and saw the following advertisement for Hillary Clinton.
I was curious to see who was paying for it, so I clicked the link and found this.
In case you can’t read the fine print, it says “Paid for by Hillary Victory Fund, a joint fundraising committee...”
I’d read by now about the HVF, and how Hillary raised $18M last quarter for HVF, as well as $55M for her campaign, and I saw how some Hillary supporters tried to claim that this $18M would be used to support state committees and downballot races, and I saw the pushback to that claim that noted, correctly, that the state committees could transfer any monies received via the HVF to the DNC (and some now have). But what I couldn’t understand was how such an advertisement could legally be paid for directly by the HVF. So I dug a little deeper.
The HVF is a joint fundraising committee (“JFC”), an entity authorized by 11 CFR § 102.17. The reason for a JFC is convenience. It allows a megadonor who wishes to give the max for the primary ($2,700 directly to Hillary, $5,000 to a PAC, $33,400 to the DNC, and $10,000 to each affiliated state or local Democratic party) to just cut one check to the HVF for $360k or so, instead of separate checks to all 35 different parties.
The regulation allows a JFC to allocate and disburse receipts and expenses as agreed upon by the participants. However, it must distribute receipts in such a way that no participant receives more than the maximum allowable donation from each donor. Thus, Hillary couldn’t receive more than $2,700 from each donor.
Additionally, as far as I understand the regulation, a JFC is only allowed to engage in joint fundraising, pay for the expenses directly related to that fundraising (i.e. the costs of the fundraising event), allocate those expenses, and then distribute the remaining proceeds. Nowhere does the regulation allow for the JFC to pay directly for advertising for the federal candidate. Thus, it appears to me that the HVF is violating election law by paying directly for these advertisements. If I am mistaken about this, someone please correct me with citation to the law that allows this.
The only way I can see that this is legal is if these advertisements are considered to be an expense related to a joint fundraising effort. But that’s stretching the spirit and letter of the law too far, in my opinion. This is nothing more than an advertisement for Hillary, and clicking on the link sends you directly to Hillary’s official campaign website. An interpretation of the law that considers these advertisements to be expenses related to a joint fundraising effort would eviscerate the limits on contributions to a campaign, as HVF would be free to collect over $360k (and counting) from each individual donor and then spend all that money on promoting Hillary with advertisements like this.
In fact, it appears that this is precisely what HVF has done. We only have the 2015 3rd quarter FEC report for HVF (also the first report), and what it reveals is disturbing.
The HVF reported $3.1M in receipts for the period ending 9/30/2016. It began the period with $0, so that is its total receipts to that point. Of those receipts, approximately $2.2M were from 6 donors who donated approximately the maximum of $363k, $100k was from 1 donor who donated $100k, $835,000 from 25 donors who each donated $33,400 (the maximum allowable donation to the DNC), $157,400 from 9 donors who donated between $2,700 and $31,000, and approximately $8,000 from the approximately 35 remaining donors. The takeaway from these donor receipts is that the maximum that could have been disbursed to Hillary Clinton’s campaign from the HVF for this quarter is $116,000 (there were 40 donors who could have given the maximum donation of $2,700, so that is $108,000 (40*$2,700), plus the remaining $8,000 from small dollar donations). (It is worth noting, however, that it is likely that most, if not all of these big money donors had probably already maxed out their $2,700 donation to Hillary (probably the reason why there were so many donations at the $33,400 level)), so the actual maximum is likely much lower than this amount).
If you look at the disbursements for HVF for this quarter, however, as reported to the FEC, what you actually find is very problematic.
First, HVF disbursed a total of $600k to the DNC. This is allowed and also properly reported on the FEC form, so no problem here. However, HVF also disbursed approximately $600k to Chapman Cubine Adams + Hussey for direct marketing — presumably for ads like the one I clicked on that was paid for by HVF. This violates the law unless it was an expense related to a joint fundraising effort.
The other problematic thing here is that the HVF paid almost $200k directly to Hillary’s campaign for staff expenses. Again, this direct payment does not seem legal since it does not appear to be related solely to joint fundraising costs.
So, the problem is that all the money that HVF spent in the third quarter (aside from a $600k transfer to the DNC) went to direct marketing and Hillary’s campaign staff. These expenses appear to be directly related to promoting Hillary, not for the expenses that accompany joint fundraising events. And because these expenses exceed the maximum amount that could be distributed to Hillary, $116,000, that’s illegal. (And also not properly reported on line 23 as contributions to Hillary’s campaign on the FEC form, but listed under Line 21 instead as an operating expenditures of HVF).
Again, I’m simply raising the question of how this can possibly comply with election law. I’ll be out the rest of this evening, but would love to come back to someone’s explanation of how spending HVF’s spending $800k in efforts related directly to promoting Hillary is legal, when Hillary was only entitled to, at most, $116,000 of that $800k.
