Organization Trends

Caveat Donator: The Pendulum Swings


Caveat Donator (complete series)
When Scams Influence ElectionsSmall Donors Need Not ApplyThe Pendulum Swings

Summary: The message is loud, aggressive, and simple: Defend the President! Others call for “Impeachment now!” or claim to “draft” a challenger to face down a hated rival, even one within the same party. But while solicitations for political contributions often bear the names of prominent politicians, political parties, or issue campaigns, they sometimes mask that they are, in fact, a sophisticated scam—raising money from small-dollar donors not to use for political advocacy or to support campaigns, but to instead funnel money back into consulting firms tied to the PAC’s officers. Now, the government—with support from political candidates who feel these groups have deceived their supporters—is cracking down on so-called “Scam PACs.”

A Bipartisan Pastime

The laws of in-versus-out-of-power party dynamics—the Presidential party acting smug and arrogant and the opposition party insane—suggest that liberals, left-wing interests, and Democrats will have to deal with their own disreputable scam artists upon losing control of the federal government. That could contradict smug predictions that only Republican supporters fall prey to Scam PACs.

Since the election of President Donald Trump, the self-styled “Resistance”—the factions most militantly opposed to the Trump administration—have seen their own versions of Scam PACs emerge. The Democratic Coalition, headed by “Resistance Twitter” figure and liberal political consultant Scott Dworkin, followed the traditional model of a PAC-for-profit, hiring Dworkin’s fundraising company, Bulldog Finance Group. The Daily Beast, a liberal-leaning online news website, noted that Dworkin’s group had spent half of the money it raised in 2017 on salaries and payments to Bulldog. That was an improvement from the PAC’s 2016 efforts, which kept 90 percent of the group’s revenues in the salaries-and-Bulldog-payments pot. To make matters worse, the Democratic Coalition also had to pay over six figures to defend itself against a libel suit brought by a donor to Republican candidates, which the Coalition ultimately settled.

Dworkin isn’t alone in founding a left-wing PAC with suspiciously high overhead to capture “Resistance” energy and funding. Failed Democratic congressional candidate and former MSNBC talking head Krystal Ball founded the People’s House Project, a PAC ostensibly created to support non-traditional Democratic candidates. However, while the PAC made some contributions to liberal politicians, Ball was criticized by former supporters for taking a substantial six-figure salary while candidate support from the PAC lagged. Similarly, three Democratic political consultants founded the PAC End Citizens United which coincidentally became the largest non-candidate client of their consultancy, Mothership Strategies.

The shift in scam-type PAC behavior from right to left—and this fails to touch the wider universe of “Resistance grift” fundraising by left-wing Internet personalities—illustrates a central truth of the Scam PAC world. The scammer preys on the fear and insecurities of the supporters of the out-of-power party or the supporters of a faction which feels it lacks influence over its party, vowing to lead a fight against an establishment or a totemic hate figure. This figure is often a party member of insufficient revolutionary zeal—scammers targeting conservatives during the Obama years frequently made the focus of their attacks then-House Speaker John Boehner, a milquetoast Chamber-of-Commerce-style Ohioan.

Countering Scam PACs

Since Scam PACs rose to prominence in the early 2010s, candidates, political activists, and the government have sought to constrain their activities and protect donors from being misled. Ken Cuccinelli, the former Virginia Attorney General whose gubernatorial fundraising was sapped by Scam PACs raising money while falsely claiming to prepare massive get-out-the-vote operations on Cuccinelli’s behalf, sued the alleged Scam PAC, Conservative Strikeforce and its operators.

Cuccinelli’s lawyers argued that the Scam PAC’s solicitations violated the Lanham Act, a federal anti-false-advertising law. Conservative Strikeforce ultimately settled with Cuccinelli, agreeing to pay $85,000 and give Cuccinelli access to the PAC’s email and direct mail solicitation lists.

Federal regulators have also taken a much tougher line against Scam PACs recently. Federal prosecutors charged Arizona consultants with numerous offenses related to a set of particularly egregious rip-off PACs; the Federal Election Commission has also investigated dubious political committees.

Conclusion

Despite the efforts by litigators, regulators, and the feds to keep would-be Scam PACs in line, it is likely that much of what these entities on both right and left do is—and will remain—legal for the foreseeable future. That puts the onus on donors to make themselves aware of the causes and organizations to which they contribute. Caveat donator—or “donor beware”—some might say.

Most political pros recommend that small-dollar donors who want to support candidates for election independently should give to the candidates’ campaigns directly. At the level of non-publicly-disclosed small-dollar donations, there is no advantage and many disadvantages to funding ideals, candidates, and causes through independent PACs. Likewise, donors looking to support ideals and ideologies, or the development of policies for the future, are better off looking to well-established nonprofit organizations.

Michael Watson

Michael is a Research Director for Capital Research Center and serves as the managing editor for InfluenceWatch. A graduate of the College of William and Mary, he previously worked for…
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