- Associated Press - Friday, February 10, 2012

WASHINGTON (AP) — Money pouring into the presidential election from super political action committees and nonprofit campaign groups appears so far to be strictly American in origin, donated by U.S. companies, unions and millionaires. But it’s easier than ever to conceal the source of money and the identities of contributors, making conditions ripe for illegal donations from foreigners, overseas companies or governments attempting to help a favored candidate for the White House.

“Clearly it is more difficult to enforce the ban on foreign spending when the source of the money is not publicly disclosed,” said Trevor Potter, head of the Campaign Legal Center and former chairman of the Federal Elections Commission. Potter is the attorney advising television comedian Stephen Colbert, who set up his own super PAC to illustrate absurdities of how money affects U.S. elections.

Foreign political donations have been outlawed since 1966, and a brief U.S. Supreme Court order last month upheld the ban for foreigners living in the U.S. as well as corporations and individuals abroad.

At the same time, a landmark Supreme Court ruling in 2010 — known as the Citizens United case — enabled corporations and other well-financed donors to give money to political committees that avoid direct coordination with campaigns. The decision led to super PACs, and later court and government rulings gave the groups more latitude by allowing donors to make unlimited donations with minimal disclosure requirements.

Election law experts said the result is an environment that could breed foreign money abuses by political committees willing to knowingly violate the law or by foreign donors who covertly funnel money to favored U.S. candidates and causes.

“The new reality presented by the decision in Citizens United and the rise of super PACs raises concerns about the challenge of discovering such illegal activity,” said Cynthia L. Bauerly, an FEC commissioner who ran the agency last year.

FEC guidelines warn that groups failing to use reasonable methods to identify foreign donations can be liable for prosecution. The guidelines suggest scrutinizing passports and addresses as well as check and credit card donations for any evidence of foreign origins.

Bauerly said the FEC is alert for any signs of foreign donations. But she acknowledged “the potential for circumventing the existing rules.”

President Barack Obama raised the issue during his 2010 State of the Union speech, warning about the Citizens United ruling: “I don’t think American elections should be bankrolled by America’s most powerful interests, and worse, by foreign entities.”

An Associated Press review of donations made to major super PACs last year found no evidence so far of foreign donations. But there were repeated instances in which contributions could not be clearly traced because donors masked themselves behind vague corporate entities or because the super PACs failed to provide clear information.

A new study by U.S. PIRG and another research organization, Demos, found that 6.4 percent of super PAC donations since 2010 were “untraceable” because of vague or masked information about the sources of the money. It also found that six of the 10 largest super PACs accepted such untraceable donations — including the pro-Romney group Restore Our Future; Priorities USA Action, a committee backing Obama; American Crossroads, a major Republican super PAC; and its Democratic party rival, American Bridge 21st Century.

Just this week, Restore Our Future said it would amend its latest financial report to clarify the source of a $250,000 donation from Glenbrook LLC of Redwood City, Calif. The campaign said it would attribute the money instead as separate, $125,000 gifts from a couple with ties to Altamont Capital Management LLC, a northern California private equity firm.

Bill Burton, a former Obama administration official who co-founded Priorities USA Action, dismissed concerns about foreign donations to his super PAC. “We vet all our donors and make sure we comply with all the appropriate laws,” Burton said.

The other major political groups declined to publicly explain their procedures, but super PACs typically ask donors to sign disclaimers and provide documents attesting that their money doesn’t come from foreign sources. Credit billing services can automatically flag foreign credit cards and addresses. Political groups also employ lawyers and researchers who scrutinize unknown or suspicious donors.

Obama’s own re-election effort was embarrassed this week by a New York Times report that $200,000 in bundled donations to his campaign was linked to Chicago relatives of a criminal fugitive with business operations in Mexico. The Obama campaign quickly returned the money.

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