The Federal Election Commission and the Justice Department have been asked by two Washington, D.C. watchdog groups to investigate possible violations of campaign finance law by a company they suspect was created to funnel $1 million to a Super PAC operated by former Massachusetts Gov. Mitt Romney’s campaign staffers.
A complaint by the Campaign Legal Center and Democracy 21 is outlined in a letter asking the FEC and Justice to “formally investigate” the activities of W Spann LLC for possible violations of a ban on making contributions in the name of another and for failing to organize and register as a political committee.
The watchdogs said published reports “paint a picture of a corporation created for no other purpose than to hide the identity of the individual or individuals or corporations seeking to curry favor with a candidate seeking election to the highest office in the land.”
The Washington Times reported on Monday that Mr. Romney had raised more than $12 million from just 90 donations so far this year in an unprecedented use of a fundraising account that can accept unlimited, loosely-regulated contributions in support of a presidential bid. Disclosures filed Sunday showed a flush reserve for Mr. Romney, bankrolled by a few dozen in the finance industry, with some donations coming directly from corporations and others ascribed to near-anonymous addresses in Utah.
Of four $1 million donations, two came from cryptically-named limited liability companies, or LLCs, sharing the same office suite in Provo, Utah. The only one with a recognizable name attached arrived from the 50th floor of a Manhattan skyscraper: The offices of John Paulson, the hedge fund manager who made millions betting on the implosion of the housing market.
Illustrating the poor disclosure that accompanies the lack of monetary limits on such accounts, The Times noted that the final million-dollar donation was reported simply as coming from W Spann LLC of 590 Madison Ave. in New York, with no suite number or other identifying information. That building has housed offices for Paulson, lobbyists Akin Gump and Bain Capital, the hedge fund Mr. Romney once led.
“This case deserves a good hard look from the agencies charged with enforcing our nation’s election laws and if violations are found they must be prosecuted vigorously to deter such violations in the future otherwise ‘straw companies’ will make a mockery of campaign finance disclosure and the specter of foreign campaign contributions will hang over the process,” said Paul S. Ryan, FEC program director at the Campaign Legal Center.
“The case should serve as yet another wake up call for Congress to shore up our woefully inadequate disclosure laws in the wake of the Supreme Court’s Citizens United decision before still more scandals emerge, further undermining the country’s faith in representative democracy,” he said.
Democracy 21 President Fred Wertheimer said the case involves a “stark example” of the secret money that “we can expect to see poured into the 2012 presidential and congressional races in the wake of the Citizens United decision.
“In this case, it appears that someone has gone to great lengths to evade the campaign finance disclosure laws in order to hide what they are doing from the American people,” Mr. Wertheimer said. “This is unacceptable and potentially illegal conduct and we are calling for an investigation of possible campaign finance violations by the Federal Election Commission and Justice Department.”
A Supreme Court ruling in January 2010 involving Citizens United gave interest groups, unions and corporations the right to pour money into issue advertising in political races. The 5-4 decision punched a hole in the complex web of federal campaign-finance laws and rules in finding that those groups should have the same rights to spend money on political ads as any person.
Direct contributions by corporations and unions to individual candidates are still forbidden.
The case stemmed from “Hillary: The Movie,” released by Citizens United, a conservative non-profit group that wanted to be able to run television ads promoting the 90-minute documentary, a critique of then presidential candidate Hillary Rodham Clinton. The FEC said that amounted to political communication financed by corporate funds, which was banned by federal law.
Citizens United sued and eventually won its case at the Supreme Court.