Many here believe it’s wrong to describe the Hillary Victory Fund's transactions with state Democratic parties as "money laundering". I believe that term is apt, since the transactions were almost certainly executed to circumvent political contribution limits. That’s the only plausible reason to wire 3.8 million into a bunch of state Democratic party accounts and demand that 3.3 million be wired to the DNC immediately.
Here’s how Treasury describes the “layering” step in a typical money laundering scheme:
the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts.
These transactions have no real purpose. They are sham transactions meant to evade the rules. Staff at banks are trained to watch for transactions where funds are moved in and out of an account quickly for no real purpose. Most large banks have software in place to identify and flag such transactions.
Here’s how the transfers from the Clinton campaign were described:
The victory fund has transferred $3.8 million to the state parties, but almost all of that cash ($3.3 million, or 88 percent) was quickly transferred to the DNC, usually within a day or two, by the Clinton staffer who controls the committee, POLITICO’s analysis of the FEC records found. [...]
For example, the Minnesota Democratic-Farmer-Labor Party received $43,500 from the victory fund on Nov. 2, only to transfer the same amount to the DNC that same day. The pattern repeated itself after the Minnesota party received transfers from the victory fund of $20,600 on Dec. 1 (the party sent the same amount to the DNC the next day) and $150,000 on Jan. 4 (it transferred the same amount to the DNC that day).
These transfers were for 5% of the total raised by the JFC, and almost 90% of that was sent immediately to the DNC. Why go through two accounts if you can wire directly?
Here’s why. There are limits to how much an individual can give to a single candidate, the DNC, and each state Democratic party. Joint Fundraising Committees were created so wealthy individuals can cut one check equal to the sum of all these limits rather than many individual checks. The money is meant to be distributed among the “joint” fund-raisers.
I suspect the amount sent to the states was the unspent sum the JFC couldn’t send directly to the DNC because it would blow through the donor’s limits on contributions to the DNC. It is tough to escape the conclusion that these are sham transactions meant to evade campaign contribution limits that apply to the DNC. If they weren’t, why send them to the state parties at all, why not send them directly to the DNC?
Sham transactions like this are also used to juice end of year sales figures at companies, or to shore up balance sheets at year end to make financial institutions appear sound to regulators, or to evade taxes by moving assets and funds around between foreign subsidiaries. Most Kossacks wouldn’t look upon such shenanigans too kindly.
Is any of what the Hillary Victory Fund, DNC or state parties did illegal? Is any of it going to be prosecuted? Tough to say. I suspect a number of $1,000 an hour lawyers signed off on this. I wouldn’t bet on prosecutions.
If this were purely about rules, we would leave it there. But it’s about more than rules. It’s also about perception.
Then he [George Clooney] told Todd, "The overwhelming amount of money that we're raising, and it is a lot, but the overwhelming amount of the money that we're raising is not going to Hillary to run for president, it's going to the down-ticket.
That is certainly the perception that the campaign has sought to create. What Democrat would argue against supporting under-funded “down-ticket” candidates? Goddammit we’re laying the foundations for the future of the Democratic party. It’s the party equivalent of motherhood and apple pie.
We’ll let Politifact weigh in on the assertion that the “bulk of the money collected at Clinton fundraiser will go to down-ballot Democrats”:
We originally published this item on April 17 and rated it Mostly True. Since then, readers have contacted us to consider other evidence about the Democratic Party’s fundraising processes, especially state parties sending money back to the Democratic National Committee. We have updated and rerated this fact-check based on new information, changing the rating from Mostly True to Half True.
That’s the fact-check equivalent of a credit rating agency taking your bond rating down four notches because someone sent them the auditor’s report.
At this point some of you are going to interject “but, but, but, the Hillary Victory Fund is about down-ballot races, that’s what it means to support the national party”!
…most of the $23.3 million spent directly by the victory fund has gone toward expenses that appear to have directly benefited Clinton’s campaign, including $2.8 million for “salary and overhead” and $8.6 million for web advertising that mostly looks indistinguishable from Clinton campaign ads and that has helped Clinton build a network of small donors..
I don't mean to pin this on Clooney. He probably told campaign fundraisers that he wanted to do everything he could to help. He might even have been told (and believed) that the funds would in fact help down-ballot candidates (some of whom are super-delegates). Whatever he might or might not have believed/known, he certainly told a lot of donors and media the money was being raised to help down-ballot candidates.
Then Clinton “loyalists” at the state parties did what was necessary to keep the money under the control of the Clinton campaign. If Hillary wins the nomination, her staff will take over the DNC, they likely want to do it right away. No surprise, this is how political machines work, they use the levers controlled by their people to deliver the goods to the boss.
But please don’t try to pretend like there isn’t a political machine in place pulling the levers. You’re fooling no one except yourself if you think that.
And let’s not suggest the funds raised and spent by the JFC didn’t matter to the Clinton primary campaign. Campaigns are expensive, and Hillary’s donor base was largely maxed out. Without the ability to exceed direct contribution limits using the JFC, the campaign might have seen it’s funds dwindle. There’s a possibility the Clintons may have had to lend the campaign money without the JFC financing $23 million worth of advertising and support. That would have made for very bad PR and a vicious cycle of doubt.
Finally, remember that all this was done in the primary. Not to combat the big, bad Republicans, but to beat a lefty.
If you tell me the ends justify the means, I won't knock you for saying or believing that. But what ends are you talking about in a Democratic primary? You could probably drum up support for anything around here if you say you’re doing it to beat the Red Team. But to beat someone running for captain of Team Blue? I guess you could tell yourself he was never on Team Blue anyway.
