I direct your attention to two New York Times articles in the national edition this morning (I still haven’t figured out how to link in DK5):
(1) Obscure Ban is Driving Inquiry Into De Blasio’s Fund-Raising (p.A1)
(2) Challenge by Sanders Still Diverts Clinton from Fall (p. A19) Here the issue at hand starts in the third column with reference to the Hillary Victory Fund, repeatedly discussed on DKos at other times.
Given the Sux Rox waves now flowing through DKos this is small fact-heavy. Sorry about that. I strongly urge all those here to read both articles.
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The NYT article reports that some of de Blasio’s fund raising efforts have drawn “scrutiny as part of a multipronged investigation being conducted by federal and state authorities, several people briefed on the matter have said, by reason of “donations solicited in part by the mayor’s campaign apparatus” into 2014 campaign donations.
What is at issue in this mess is contributions to state senate candidates without contributing from the donor directly to the candidate nor to the State Democratic Party, thought to be controlled by Governor Cuomo and not usable by reason of that control because Cuomo was not aggressively pressing for taking of D control of the State Senate in that year.
There is also involved in these investigations a nonprofit organization controlled by Mr. deBlasio whose stated purpose was advocacy for universal Pre-K in public schools and affordable housing; the nonprofit was recently shut down, according to the Times. This diary is not about that nonprofit, although the investigations appear to include it, and some of the allegations are in the pay to play zone.
The statute on which the investigations are apparently based, violation of which is stated to be a felony, involves contributions made to an entity for the purpose of evading a contribution limit applicable if done directly. This statute is in New York law and has not been used previously by prosecutors at least looking back as far as 1999 by the NYT.
Prosecutors have reportedly sent out subpoenas through the Manhattan District Attorney’s office, seeking evidence as to what the NYT said had been described as ‘a scheme to use the county committees to illegally redistribute contributions to candidates favored by Mr. de Blasio.” Some state subpoenas were also sent to some D senate candidates in tight races that year in connection with this matter. (Two have denied in the article receiving one ).
The NY statutory structure applicable allows county committees to receive up to $102,300, from a donor, with no limitation on what may be retransmitted to candidates, but caps at $11,000. contributions for and made directly to state senate candidates in general elections.
The article describes the amount received by the Ulster Putnam and Monroe County Democratic Committees in this arrangement as at least $1.2 million, and at least one $100,000. contribution from a particular named donor, who also contributed to the Mayor’s nonprofit and bundled for him.
Representatives of the Ulster and Monroe county organizations are described in the article has having been told before the checks arrived where they were to go, or which candidate they were intended for, by “mak(ing) a contribution to the county committee where the contribution limit is higher,” and the county organizations said they had not dealt directly with the donors.
That the diversion to county committees was intentional is supported in the article by a description by John Catsimatidis, a well known New York grocery magnate, who said de Blasio asked him as a favor to send the money in this scheme at an Al Smith dinner, with nothing in it for Catsimatidis, and that specific instructions were given to those who did the mechanics of contributing for Mr. Catsimatidis on ”where to send the check” by one Ross A. Offinger who was described in the article both as a campaign finance manager for de Blasio at one point and as treasurer of a “Campaign for One New York.”
According to the article, the Federal part of this michegas is directed at fund-raising by Mr. deBlasio and his staff subsequent to his 2013 election, and addresses the question of whether donors received favorable municipal treatment in exchange for their contributions. Relevant Donors are listed in the article as including known large donors and those who had not done large donations before, and both businessmen and what are described in the article as ‘unions.’
This investigation appears to be far along if there are multiple examiners and subpoenas are out.
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The Hillary part of this diary involve the Hillary Victory Fund where Hillary supporters contribute the fund, supposedly for the use of downticket candidates by state organizations, but where the instructions subsequently reported as to the money were that all of the funds had to be sent up to the Democratic National Committee which would decide who got it, and that maybe in the end the states might get something, but not now. The HRC Campaign comments on criticism of this procedure is that it is technically legal and that is all that matters.
The Hillary Victory Fund has done at least one national solicitation to small voters because I received it and complained here at the time when I saw the diary recounting Minn campaigns which had not seen money from a campaign then being pitched as one raising money for downticket candidates, “to build strong democratic campaigns across the country.” NY is not one of the 34 states listed as part of the joint campaign and, although I received the solicitation, my state isn’t either.
The mailing address for donations is a PO box in VA.
According to the teeny print on the back of the donation form included as part of the mailing I received,the first $2700/$5,000 of any individual or PAC donation goes to Hillary for America, the next $33,400/$15.000 from an individual or PAC goes to DNC, and the rest up to $10,000/$15,000 per state goes in equal shares to state committees in 34 states. A donation would thus have to exceed $36,100. for any state to get a penny of it. The mailed solicitation also provided that any contributor may designate his/its contribution for a particular participant, and allocations may change if the ones stated result in excessive contributions. “Excessive contributions” is not defined in the solicitation mailer.
According to the NYT article noted above, the HRC Campaign is now talking to senior bundlers, in a meeting the day after the NY primary, to step up contributions to the Hillary Victory Committee, described as a joint fund raising activity with the DNC and state organizations.
The article states that the purpose of doing this is to be able to sock away millions of dollars that would benefit her campaign during a general election while “avoiding the appearance of presumption that might come with raising general election money while Mr. Sanders remains in the race. . .The Victory Committee had raised $61 million through the end of March, according to FEC filings, with most of the money ending up back in Mrs. Clinton’s campaign” or at the DNC.
“Much as Mr. Obama did in 2012, Mrs. Clinton’s team has used party contributions to the joint committee to subsidize some costs to her of her presidential campaign, including prospecting for small donors.” The Hillary Victory Fund is directed in no small degree at small donors; the top dollar amount mentioned in the solicitation I got was $100, and then only a blank with a dollar sign, although the teeny print on the back had four and five digit numbers mentioned for distribution purposes, per donor.
Advisors to Mrs. Clinton's campaign said at what was apparently a post primary meeting on Wednesday, that it was remaining focused on primary, on bolstering her fund raising for the contests against Mr. Sanders. Those advisors said that was remaining focused on the primary in part because that money -up to $2,700. from each supporter- could be used during the general election, too, while general election contributions could not be spent until after the party’s convention in July.
The Clinton campaign’s finances are an issue because, according to the same article, the campaign has spent more than it has raised in each of the first three months of this year according to FEC filing data, twelve million dollars in ads in March alone. The continuation of the Sander campaign has added to the strain. And the campaign has said it wants to avoid the blunder of 2008 wherein she ended up lending millions of dollars to her campaign to stay afloat after running short of primary cash. Readers of DKos will remember criticisms of Mrs. Clinton for leaving the campaign trail for 52 or so big ticket fundraisers in February and March.
This fund raising pattern is also functioning on the notion that the limits of donation for state organizations is much higher than that for candidates but that the ability of the state to donate it back to the DNC and the HRC campaign means that donors can give more than the $2700. most of us are limited to and Hillary and the DNC for her will get it, and has as to the $61 million mentioned in the Times.
As has been noted by others, FEC enforcement of any rule, legal or not is limited at this time by the fact that it is short members and is deadlocked and thus cannot do much at all, no matter how justified.
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It is a curse of this situation that both campaigns have used the method of attempting to exercise what seem to be more generous donational elements when directed to official party organizations than are available for donations directly to candidates, in order to increase funds in fact directly available to favored candidates, and that the structure of the donation pattern in both is so horrendously similar. At least in NYT English.
It is also a curse that both structurers of donations do a good bit of business in NY and may be subject to the law noted above, a law thought sufficiently reliably enforceable that both state and federal investigations are peering in an unfriendly manner accompanied by subpoenas at the de Blasio version of it, and that they have been doing so for some time. Subpoenas often appear only when the issuer is sufficiently sure of what it thinks is the problem that it can structure its demands to get what it needs if what it needs exists. The pitch was not limited to the 34 participant states, and it seems unlikely that they eliminated NY, not included, from the solicitation list, but did include WA.
While I can see fiddles such as a post office box in a state part of the 34, and noting that no money goes to states not in the 34, it is clear that the pitch of the Hillary Victory group was national.
It is also clear that both schemes designed very flagrantly to avoid contribution limits by individual PACs, mentioned on the actual donation papers as possible donors and who are allowed to designate their recipients specifically, and that state organizations for their own account are at the very end of the line and limited in what they may receive, just enough to pay the legal bills for being included, and not anything constituting a windfall or intentionally raised amount for their own D candidates.
Although I don’t like this at all, the biggest problem is that this very similar scheme is at the prosecutors’ stage for de Blasio and the question will be raised for her as well if it goes anywhere after today, as if the first page of the NYT were not bad enough, during the rest of this campaign season, because of the extreme similarity and the fact that the Feds are already in it.
What I hope I will not see, but am not optimistic, is a meticulously legalistic fine print defensive explanation about why this was OK for HRC Campaign and not de Blasio’s organization, which earned what it gets because it made mistake X that they smartly avoided, the very thing that make Hillary look opportunistically bad. And given de Blasio’s investigative problems about now, there is always a risk that such an explanation, if tendered, flat out may not work.
And it is also the case that NYC is the kingdom of gossip and it is highly unlikely that the staff of the two campaigns did not talk to one another in the way of Dem permanent staff, who move from campaign to campaign, about the investigations and subpoenas.
The worst of it is that the Hillary article also said that a lot of the money her campaign was spending was for longer term ways of obtaining small donors. Plainly when sent to me the Hillary Victory Fund is one of those expensive long term plans. How they could have missed its legal and ethical issues is one of those ODAMN!YOUDIDWHAT! lapses in judgement that do happen in the overconfident campaign.
This is the last thing she needed, and from a close ally on top of it.